Coca-Cola Enterprises has been hit by a lawsuit in the US. The securities fraud class action complaint alleges that the company did not advise that it was engaged in channel stuffing, and that some executives engaged in insider trading.

The lawsuit, Argento Trading Company, L.P. v. Coca-Cola Enterprises, Inc. et al., names the company and several executives including president and interim CEO Lowry Kline and former president and CEO John Alm.

The suit claims that, between 15 October 2003 and 28 July 2004, the defendants "failed to disclose to the investing public that CCE had a longstanding and systemic practice of channel stuffing - forcing extra product onto its customers to boost revenue. CCE's reported financial results and future earnings prospects were materially misleading without disclosure about CCE's channel stuffing practices and how those practices affected CCE's financial condition."

"While defendants were misrepresenting CCE's financial condition, and CCE's stock price climbed through the Class Period (15/10/03 - 28/07/04), the individual defendants engaged in substantial insider trading," the suit continues. "For example, Defendant Johnston sold over US$172m worth of his CCE stock, representing 19.52% of his holdings or 6,481,082 shares. Defendant Mannelly sold approximately 372,396 shares of his CCE common stock, with proceeds totalling approximately $9,353,964, and Defendant Van Houten sold approximately 225,953 shares of CCE common stock, for proceeds totalling approximately $6,123,757. Other individual defendants sold substantial amounts of CCE stock as well.

"On 29 July 2004, CCE made a partial corrective disclosure regarding CCE's true financial condition and diminished future earnings prospects. Reacting to CCE's disclosures, and the individual defendants' insider trading activities, investors hammered CCE's stock price on record trading volumes. Thus, by the close of business on 29 July, CCE's stock price fell by approximately 25% or $5 per share, erasing nearly $3.1bn of CCE's then $12.5bn market capitalisation."

Anyone wishing to request the court of Georgia to appoint them as lead plaintiff has until 10 April to come forward.

When contacted by just-drinks, no one was immediately available at CCE to comment.