Diageo agreed to pay $5 million to settle U.S. Securities and Exchange Commission (SEC) charges from 2015. Although the company did not admit to any wrongdoing, it agreed to cease and desist from further violations.
Per the SEC, the charges stem from claims that Diageo failed to disclose how employees in the North American division pushed distributors to buy more wine and spirits than they needed—specifically in its 2014 and 2015 fiscal years—which allowed the company to report higher growth in operating profit and net sales.
Ultimately, the SEC felt Diageo created a misleading image of its financial results, leading investors to believe that customer demand was the reason behind its reported growth, says Melissa Hodgeman, an associate director in the SEC’s enforcement division.
Source: Reuters, February 2020