A U.S. reporting company that produces, distills and markets alcoholic beverages, such as vodkas, whiskeys, tequilas, gins and beer, and that has shares and American Depositary Shares listed on the London Stock Exchange and the New York Stock Exchange, respectively, is the subject of a Securities and Exchange Commission ("SEC") order. Throughout its 2014 fiscal year and the first half of fiscal year 2015, the issuer continuously pressured its distributors to buy inventories in excess of their demands ("Overshipment") in order for it to meet its performance targets in a declining market. The Overshipment overstated the company's organic net sales growth and organic operating growth which, in effect, enabled the company to meet or surpass its analysts' and investors' expectations for both financial metrics.

In its February 19, 2020 cease and desist order, the SEC imposed U.S.$5 million civil penalties against the issuer for its Securities Act of 1933 ("Securities Act") and Securities Exchange Act of 1934 ("Exchange Act") violations arising from the Overshipment. According to the SEC, the issuer violated Sections 17(a)(2) and 17(a)(3) of the Securities Act when it provided materially misleading public statements about the issuer's financial performance by not disclosing in its 2014 and 2015 annual reports on Form 20-F the significant known trends and uncertainties arising from Overshipment, particularly: (i) its effects on demand and the resulting distributor inventory levels, (ii) the positive impact those trends had on organic net sales and organic profit growth and (iii) the negative impact they were reasonably likely to have on future sales. The issuer also violated Section 13(a) of the Exchange Act and Rule 13a-1 and 12b-20 thereunder when it failed to disclose within the required Management's Discussion and Analysis sections of its annual reports the material impact of these known trends and uncertainties on current and future operating results or financial conditions.

A copy of the cease and desist order is available here.

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