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Diageo Charged with Disclosure Failures by the SEC

Diageo Charged with Disclosure Failures by the SEC

Diageo Charged with Disclosure Failures by the SEC

Alcohol producer Diageo plc, has been charged by the Securities and Exchange Commission (SEC) for violating antifraud provisions of  Section 17(a)(2) and (3) of the Securities Act of 1933 and particular reporting provisions of the federal securities laws.  Diageo’s lack of necessary disclosure of trending shipments and sales, has lead to a misleading idea of the company’s results and performance.  Diageo North America (DNA) is Diageo’s largest, and most profitable subsidiary.

The SEC’s order states, that DNA persuaded distributors to purchase a magnitude of product necessary to meet sales goals. Diageo was appearing as though they had more growth to investors and analysts, without disclosing the trends that came from pressured orders in excess.  In today’s press release on the SEC’s website states: “Investors rely on public companies to make complete and accurate disclosures upon which they can base their investment decisions,” said Melissa R. Hodgman, an Associate Director in the SEC’s Division of Enforcement. “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.”

Diageo will pay a $5 million penalty, and will cease and desist from any additional violations.

Follow the link to read the press release in full: https://www.sec.gov/news/press-release/2020-36

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