Coke Settles Shareholder Suit for $137M

July 7, 2008 ( - Coca-Cola Co agreed to pay $137.5 million to settle a shareholder lawsuit that claimed it artificially inflated sales to boost its stock price.

The suit, led by Carpenters Health & Welfare Fund of Philadelphia & Vicinity, said a practice known as “channel stuffing” was used by Coca-Cola to artificially inflate results and give investors a false picture of the company’s health, according to Reuters. Institutional investors in the suit claimed that in 1999 Coca-Cola forced some bottlers to purchase hundreds of millions of dollars of unnecessary beverage concentrate in an effort to make its sales seem higher, Reuters said.

Last year, a finance professor retained by the pension fund as an expert determined shareholders lost more than $1.3 billion when the company improperly inflated revenues (See Pension Fund Stock Suit against Coke Generates $1.3B Damage Estimate ). Coke dismissed the professor’s report as “seriously flawed.”

According to the news report, the settlement agreement said the company denied any wrongdoing or liability, but agreed to settle the case to avoid lengthy and uncertain litigation.