Diageo agrees to pay $5 million to settle SEC charges over its disclosure failures

February 20, 2020

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diageo press kit — Source: Diageo press kit

Diageo plc agreed to pay a penalty of $5 million to settle the allegations of the U.S. Securities and Exchange Commission (SEC).

The SEC accused Diageo of violating the antifraud provisions of the Securities Act of 1933 by failing to disclo

se material information to investors. The Commission also accused the company of violating certain reporting provisions of the federal securities law.

Diageo is the world’s largest producer of alcoholic drinks including the Guinness beers and Johnnie Walker Scotch whiskeys and other brands.

Diageo misled investors regarding its performance

According to the SEC, the employees of its most profitable subsidiary, Diageo North America (DNA) pressured distributors to buy products more than customer demand. Its objective was to meet internal sales targets while market conditions were declining.

The shipment increase allowed the company to meet performance targets and to report growth in key performance indicators. Analysts and investors are closely monitoring these indicators.