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ADM Pays $40M SEC Fine for Misleading Investors
29 Jan
Summary
- ADM settled SEC allegations of improper accounting for $40 million.
- Former executives face charges for alleged role in inflating profits.
- The nutrition unit's performance was allegedly manipulated for investor reporting.
Archer Daniels Midland (ADM) has agreed to a $40 million civil penalty settlement with the Securities and Exchange Commission (SEC) concerning allegations of misleading investors about its nutrition segment's financial performance. This resolution, reached without ADM admitting or denying wrongdoing, stems from a three-year investigation into improper accounting practices.
Regulators alleged that ADM manipulated accounting to artificially enhance the nutrition unit's profits, primarily by reallocating earnings from other divisions through non-market "intersegment" sales and other adjustments. This occurred primarily during fiscal years 2021 and 2022.
In connection with these issues, former ADM executives Vince Macciocchi and Ray Young, along with current CFO Vikram Luthar, were charged. Macciocchi and Young have agreed to settlements involving disgorgement and civil penalties.
However, Vikram Luthar continues to face accounting and disclosure fraud charges. The SEC complaint asserts that Luthar directed adjustments to boost the nutrition segment's reported operating profit, aiming to meet projected growth targets for investors. Luthar denies the allegations and intends to contest them.
ADM stated it has implemented significant changes to its financial leadership and internal controls, including correcting prior period errors and restating financial reports. The company expressed satisfaction in resolving these matters and reinforced its commitment to transparency and stakeholder trust.
