Diageo failed to disclose the trend to investors. It also failed to reveal the positive impact of the trend to its sales and profit as well as the negative impact of the unnecessary increase in inventory on its future growth.
Diageo and its subsidiary misled investors by creating the impression that they achieved certain key performance indicators through normal customer demand.
In a statement, SEC Division of Enforcement Associate Director Melissa Hodgman said, “Investors rely on public companies to make complete and accurate disclosures upon which they can base their investment decisions.”
“Diageo pressured distributors to take more products than they needed, creating a misleading picture of the company’s financial results and its ability to meet key performance indicators,” she added.
On the other hand, the company said it is “pleased to resolve” the SEC charges and expressed its commitment to “maintaining a robust and transparent disclosure process.”
The world’s largest producer of alcoholic drinks settled without admitting or denying the allegations of Commission.
