ADM and Former Executives Settle SEC Charges Over Inflated Nutrition Segment Profits

USA: SEC Charges ADM and Former Executives for Accounting Disclosure Fraud

Archer-Daniels-Midland Company (ADM) and three former senior managers have agreed to settle charges that they materially inflated the performance of the company’s Nutrition segment, a unit the firm promoted as a key growth driver to investors.

Alleged Accounting Adjustments

The SEC alleges that the executives directed retroactive rebates and price changes that were not customary for third‑party customers. These one‑sided adjustments were designed to boost Nutrition’s operating profit to meet projected growth rates of 15% to 20% per year for fiscal years 2021 and 2022, and to mask shortfalls in earlier periods.

Settlement Terms for ADM and Executives

Under the settlement, ADM, former CFO Vince Macciocchi, and former senior VP Ray Young have entered cease‑and‑desist orders and will not admit or deny the findings. ADM has agreed to pay a $40,000,000 civil penalty, while Macciocchi will disgorge $404,343 with prejudgment interest and pay a $125,000 civil penalty, and Young will disgorge $575,610 with prejudgment interest and pay a $75,000 civil penalty. Macciocchi also accepted a three‑year officer and director bar.

Individual Liability for Vikram Luthar

A separate litigated action targets former executive Vikram Luthar, who the complaint says directed the improper adjustments and aided ADM’s broader violations. The complaint seeks permanent injunctions, an officer and director bar, disgorgement of ill‑gotten gains, civil penalties, and reimbursement of executive compensation under the Sarbanes‑Oxley Act.

Cooperation and Remediation

ADM received credit for cooperating with the SEC, conducting an internal investigation, and providing analyses from an external accounting expert. The company has implemented new internal accounting controls for intersegment transactions, amended relevant policies, and begun testing the effectiveness of those controls.

Investor Compensation

The order establishes a Fair Fund to distribute monetary relief to investors harmed by the misleading disclosures.

Commission Commentary

“Transparent and honest disclosure are key to maintaining market integrity, so when ADM misled its investors, the SEC stepped in to protect them and the market,” said Judge Margaret A. Ryan, Director of the SEC’s Division of Enforcement.

This report is based on information from SEC, licensed under Public Domain (U.S. Government Work). Source: Official U.S. Government release.