The US regulator, the Securities and Exchange Commission (SEC), has launched an investigation into whether drinks company Diageo has been shipping excess stocks to customers to boost results. 
 
 Sending customers more cases than they had ordered would allow Diageo to report higher sales than were placed. 
 
 Diageo said it was "working to respond fully to the SEC's requests for information in this matter". 
 
 Shares in Diageo closed down 2.1% at £18.66 following the news. 
 
 The US market accounts for nearly $18bn of Diageo's annual sales. 
 
 But sales in the region have been falling since 2011. 
 
 Diageo - which makes drinks including Smirnoff vodka, Guinness and Johnnie Walker whiskey - saw its share price surge last month on reports of a possible £50bn takeover bid from the Brazilian billionaire Jorge Paulo Lemann and his private equity partners. 
 
 In the second half of last year the world's biggest distiller of Scotch whisky reported a sharp fall in sales in some of its key markets. 
 
 Diageo said profits fell by 18% to £1.7bn, while overall sales were down 1%. 
 
 Trading conditions in parts of Europe and Russia, described as "tough" at the start of the year by the company, are thought to remain difficult. ||||| The Securities and Exchange Commission is investigating whether Diageo DEO 0.06% PLC has been shipping excess inventory to distributors in an effort to boost the liquor company’s results, according to people familiar with the inquiry. 
 
 By sending more cases to distributors than wanted, the British-based owner of Smirnoff and Johnnie Walker would be able to report increased sales and shipments, according to these people. 
 
 Diageo confirmed Thursday to The Wall Street Journal that it received an inquiry from the SEC regarding its distribution in the U.S. 
 
 “Diageo is working to respond fully to the SEC’s requests for information in this matter,” a company spokeswoman said. 
 
 Diageo’s American depositary receipts fell 5% Thursday afternoon, following the Journal’s report on the inquiry, and ended the day down $4.99, or 4.2%, to $114.67. 
 
 The inquiry coincides with a period of tumult in Diageo’s executive ranks. The company announced in June that North American President Larry Schwartz would be retiring by the end of the year. Since then, the company has also announced the departures of its chief marketing officer for North America and a president of national accounts in the U.S. 
 
 It recently named Deirdre Mahlan, currently chief financial officer, as president of Diageo North America. 
 
 The North American region is the largest and most important to Diageo’s bottom line. It accounted for about a third of the company’s $15.9 billion in sales in 2014 and around 45% of operating profit. Volume in the region decreased 1% last year, but price increases helped sales rise 3% to about $5.34 billion. 
 
 Diageo—which reports full-year results next week—has suffered through a period of slumping sales in the U.S. The company raised prices under former Chief Executive Paul Walsh, and its U.S. market share declined every year between 2011 and 2014, according to Exane BNP Paribas. 
 
 Diageo’s blockbuster Smirnoff brand struggled as consumers grew tired of flavored vodka. Interest in Captain Morgan has also waned, and the rum hasn’t been popular as a shot, a trend that has grown in popularity of late. Diageo also lost market share last year in Canadian whisky as its Crown Royal brand adapted to the flavored whiskey trend later than rivals. 
 
 In the U.S., liquor producers follow a three-tier system to market. Producers like Diageo ship to wholesalers, who then ship to retailers. Liquor companies can record shipments as sales when they ship them to the wholesaler. 
 
 Diageo Chief Executive Ivan Menezes said during a call with analysts in January that the company has shifted its focus from shipments, which reflect sales to distributors, to depletions, which reflect sales by distributors to retailers. He said the company was reducing the level of inventory distributors carry to get “better visibility on customer depletions.” 
 
 Diageo CEO Ivan Menezes Photo: Bloomberg News 
 
 Pernod-Ricard , the world’s second-largest publicly traded liquor company, emphasizes depletions during earnings reports and uses that as a benchmark for performance. Brown-Forman Corp. , the largest publicly traded U.S. spirits company, measures its volume performance with depletions. 
 
 Diageo has about a 20% share of the U.S. spirits market, according to the industry tracking service Impact Databank. It became the market leader after Mr. Menezes’s predecessor, Paul Walsh, exited businesses like Burger King and Pillsbury and focused on alcohol, scooping up Seagram Co. brands Captain Morgan and Crown Royal in a $5 billion deal. 
 
 Write to Tripp Mickle at Tripp.Mickle@wsj.com and Saabira Chaudhuri at saabira.chaudhuri@wsj.com ||||| Smirnoff and Johnnie Walker drinks giant Diageo is reportedly being investigated by the Securities and Exchange Commission over allegations it tried to artificially boost sales figures by shipping excess inventory to distributors. 
 
 Sending more cases to distributors than they have ordered could potentially have allowed Diageo to report increased sales and shipments. 
 
 
 
 The British company, the world’s largest producer of spirits, confirmed to the Wall Street Journal, which first reported the story, that it was cooperating with the SEC on an investigation. “Diageo has received an inquiry from the US Securities and Exchange Commission regarding its distribution in the United States. Diageo is working to respond fully to the SEC’s requests for information in this matter,” the company said in a statement. The SEC declined to comment. 
 
 The inquiry comes at a sensitive moment for Diageo. Last month the company’s shares soared after reports that Brazil’s richest man, billionaire deal-maker Jorge Paulo Lemann, was considering a takeover. Lemann has led a series of ever larger brewery takeovers culminating in 2004’s merger of Brazil’s AmBev with Belgium’s Interbrew to create the world’s largest beer company. Diageo owns Guinness as well as its portfolio of spirits and wine brands. 
 
 
 
 The takeover rumour coincided with the announcement that North American president Larry Schwartz would be retiring by the end of the year. Diageo has since announced the departures of its chief marketing officer for North America and a president of national accounts in the US. 
 
 
 
 North America accounts for about a third of Diageo’s $17.58bn in sales and around 45% of operating profit. Sales have been in decline in the region since 2011. Next week the company will release its second-quarter results and is likely to be quizzed further by shareholders and analysts about the SEC inquiry. 
 

– British booze giant Diageo is feeling the burn in the US: The Securities and Exchange Commission is investigating claims that company sent American distributors more inventory than they requested, which would have allowed it to record a false spike in sales, the Guardian reports. Diageo tells the Wall Street Journal it has received an "inquiry" and is "working to respond fully to the SEC's requests for information in this matter." Diageo, which makes Smirnoff, Guinness, Captain Morgan, and Johnnie Walker, among others, has about a 20% share of the American spirits market; about a third of the company's $15.9 billion in sales last year came from North America. The BBC reports sales have been falling in the US since 2011.