ADM agrees to pay US$40M SEC settlement over accounting, disclosure fraud in nutrition business 

USA – Archer Daniels Midland (ADM) has agreed to pay a US$40 million civil penalty to settle federal accounting and disclosure fraud charges brought by the U.S. Securities and Exchange Commission (SEC). 

According to the SEC’s complaint, ADM and certain former executives materially inflated the financial performance of the company’s Nutrition segment, which the company had “touted to investors as an important driver of overall growth.”  

The regulator alleged that the misconduct occurred during fiscal years 2021 and 2022. 

The complaint stated that former ADM executives directed accounting “adjustments” to transactions between the Nutrition unit and other ADM business segments when the division was falling short of its operating profit targets. These adjustments allegedly included retroactive rebates and price changes that were not available to third-party customers. 

According to the SEC, the adjustments effectively amounted to one-sided transfers of operating profit to the Nutrition business. The purpose, the regulator said, was to make it appear that Nutrition was achieving the 15% to 20% annual operating profit growth that executives had projected to investors. 

In announcing the settlement, the SEC said ADM has taken significant remedial actions. These measures include implementing new internal accounting controls governing intersegment transactions, amending policies and procedures, and testing the effectiveness of the new controls.  

The SEC’s order also establishes a Fair Fund to distribute the monetary relief to investors harmed by the violations. 

The SEC said ADM agreed to the US$40 million settlement “without admitting or denying” the findings. The former executives named in the complaint also agreed to pay separate settlements. 

Judge Margaret A. Ryan, Director of the SEC’s Division of Enforcement, highlighted the importance of accurate financial disclosures, noting that transparency is essential to maintaining market integrity. She also credited ADM’s cooperation with the investigation and its remediation efforts. 

The lawsuit follows events from roughly two years earlier, when ADM’s shares fell sharply after the company announced it had placed then-Chief Financial Officer Vikram Luthar on administrative leave pending an internal probe into accounting practices related to intersegment transactions.  

In April of that year, ADM disclosed that Luthar would resign in September 2024. Former 3M CFO Monish Patolawala assumed the role in August 2024. 

“We are pleased to put these matters behind the Company,” ADM Chief Executive Officer Juan Luciano said. “These past couple of years have underscored what’s core to ADM — incorporating learnings to further strengthen our business.” 

“This is reflected in the extensive actions we have taken to enhance our internal controls and ensure accuracy of our financial reporting,” Luciano added. “Looking ahead, we remain committed to operating with transparency and integrity and upholding the trust of our stakeholders every day.” 

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.