Global agribusiness giant ADM has agreed to pay the US Securities and Exchange Commission (SEC) US$40M to settle an investigation into intersegment sales.
In a press release on its website on 27 January, the SEC said it had settled charges against ADM and its former executives, Vince Macciocchi and Ray Young, and a litigated action against its former executive Vikram Luthar, for inflating the performance of its Nutrition business segment.
ADM had accepted the settlement without admitting or denying the findings, the SEC said.
The company said the US Department of Justice had closed its investigation into the matter with no further action.
The SEC’s complaint against Luthar alleged that he directed “adjustments” to Nutrition’s transactions with other ADM business segments when the division was falling short of its operating profit targets for fiscal years 2021 and 2022.
“These adjustments also included retroactive rebates and price changes; were targeted to specific dollar amounts to hit Nutrition’s operating profit goals or mask a shortfall; and were not provided to third parties,” the SEC said.
SEC’s settled charges against ADM, Macciocchi and Young found that Macciocchi and Luthar had led efforts to identify and structure adjustments for fiscal years 2021 and 2022, and that Young had “negligently approved improper adjustments for fiscal years 2019 and 2021”.
In accepting the settlement offer, the SEC said it had considered ADM’s cooperation and “significant remedial measures”.
“Specifically, the company conducted an internal investigation, voluntarily reported its findings to the staff, and provided the staff with additional analyses from an outside accounting expert,” the SEC said.
“ADM’s remedial measures included implementing new internal accounting controls around intersegment transactions, amending its policies and procedures, and testing the effectiveness of its new controls, among other things.”
The order also created a Fair Fund to distribute the ordered monetary relief to investors affected by the violations, the SEC said.
Commenting on the settlement in a press release on ADM’s website on 27 January, Juan Luciano, chair of the board, president and CEO, said: “We are pleased to put these matters behind the company.
Looking ahead, we remain committed to operating with transparency and integrity and upholding the trust of our stakeholders every day.”
ADM said it had also implemented significant changes to its financial leadership team and financial controls.
