Coke Loses Bid to Halt Securities Fraud Suit

Coca-Cola Co. lost its bid for dismissal of a securities fraud lawsuit that claims the company concealed financial trouble from investors by inflating sales.

A federal judge ruled last week in Atlanta that there was enough evidence to allow investors to get internal documents from Coca-Cola to develop their case, filed in October 2000.

The company contended that the suit should be thrown out because there was insufficient evidence to support the claims.

Investors claim that Japanese bottlers were forced to take excess syrup to boost sales, a practice called “channel stuffing.” They cited three former Coke executives with “extensive experience in Japan,” the order said.

Coca-Cola has said U.S. prosecutors and the Securities and Exchange Commission were investigating its accounting practices after a fired employee sued last year.

“The court has to indulge most of the assumptions and presumptions in favor of the plaintiffs at this early stage of the case,” said Richard Deane, a lawyer at the firm Jones Day in Atlanta.

Providing documents and witnesses for depositions “can be an expensive proposition, even if you win” the case, he said.

Hunt granted Coca-Cola’s request to dismiss allegations that the company misrepresented its financial conditions to analysts and reporters.

Coca-Cola spokesman Ben Deutsch said Monday that the claims “lack merit.”

Coca-Cola shares fell 35 cents to $50.58 on the New York Stock Exchange.