General Mills Faces Questions on Shipments

General Mills Inc. employees have been questioned by the Securities and Exchange Commission about shipping excess orders to supermarkets to inflate sales and boost the No. 2 U.S. cereal maker’s share price, according to a lawyer for a fired employee who has met with the agency.

On Tuesday, General Mills said the SEC’s staff had recommended civil action against the Minneapolis-based company over sales and accounting practices.

Former General Mills sales manager Jeffrey Millard told SEC investigators the maker of Cheerios and Lucky Charms had engaged in “trade loading,” or shipping excess products, since 1998, his attorney said. The shipments accelerated in early 2003 because the company’s final payment on April 30 for the purchase of Pillsbury from Diageo was based on General Mills’ stock price, he said.

General Mills and the SEC declined to comment.

Shares of General Mills rose 12 cents to $45 on the NYSE.