PHILADELPHIA (Reuters) - Coca-Cola Co <KO.N> agreed to pay
$137.5 million to settle a shareholder lawsuit that claimed the
world's largest soft drink maker artificially inflated sales to
boost its stock price, according to court documents.
The lawsuit, filed in October 2000, claimed that in 1999
Coca-Cola had forced some bottlers to purchase hundreds of
millions of dollars of unnecessary beverage concentrate in an
effort to make its sales seem higher.
Bottlers use the beverage concentrate to make soft drinks.
Institutional investors, led by Carpenters Health & Welface
Fund of Philadelphia & Vicinity, said the practice, known as
"channel stuffing," artificially inflated Coca-Cola's results
and gave investors a false picture of the company's health.
The investors claimed that Coca-Cola had failed to disclose
material facts about its business and these omissions and
misrepresentations harmed investors.
Without admitting any wrongdoing, Coca-Cola agreed to the
settlement on June 26, according to court documents obtained by
Reuters. The settlement was filed with the court on July 3.
Coca-Cola had previously denied any wrongdoing or
liability, but agreed to settle the case to avoid lengthy and
uncertain litigation, the settlement said.
The settlement applies to anyone who acquired Coca-Cola
common stock from Oct 21, 1999 through March 6, 2000, according
to the settlement agreement, which was filed with the U.S.
District Court for the Northern District of Georgia.
In 2005, Coca-Cola settled a similar issue over the sale of
excess beverage concentrate to bottlers in Japan between 1997
"Coca-Cola misled investors by failing to disclose
end-of-period practices that impacted the company's likely
future operating results," the U.S. Securities and Exchange
Commission said at the time.
Coca-Cola admitted no wrongdoing and paid no fines in that
settlement pact, but agreed to cease and desist from future
securities violations and maintain tight internal controls on
sales to bottlers and customers. The U.S. Department of Justice
had closed an investigation without filing charges against the
(Reporting by Jessica Hall; Editing by Clarence Fernandez)
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