ADM to Pay $40 Million to Settle SEC Accounting Fraud Claims
Food processing and commodities trading corporation Archer Daniels Midland (ADM) reached Wednesday (Jan. 28) a $40 million settlement with the Securities and Exchange Commission (SEC) to resolve allegations that the company defrauded investors by artificially inflating profit margins in its nutrition segment, according to The Wall Street Journal (WSJ).
The settlement concludes a regulatory investigation into accounting practices that previously triggered a significant stock decline and the departure of several top executives.
ADM settled the case with no admission of wrongdoing, according to WSJ.
The SEC’s case focused on a period between 2021 and 2022, during which ADM’s then-CFO Vikram Luthar allegedly directed accounting adjustments to move profits from other segments into the nutrition division. According to the SEC, these maneuvers were designed to make the nutrition business — a unit ADM has spent billions to expand through acquisitions — appear more successful than it was in reality.
While the company settled the claims without admitting or denying wrongdoing, the SEC has filed a separate lawsuit against Luthar in a Chicago federal court. The regulator alleged that Luthar directed the fraud and personally benefited by selling more than $1.8 million in ADM shares while the stock price was inflated by the misleading performance reports.
The SEC is seeking a court order to force Luthar to return those gains, pay a financial penalty, and be barred from serving as an officer or director of any public company. Luthar, who resigned in 2024, intends to fight the allegations. His attorney, Junaid Zubairi, stated that the transactions were “long-standing business practices” that were “considered, approved, and implemented in good faith.”
One specific instance cited by the SEC involved a concocted rebate intended to shield the nutrition unit from rising costs related to a processed soybean product. When another executive characterized the rebate as a “gift,” Luthar reportedly described the transaction as “risk sharing.”
In a statement, ADM CEO Juan Luciano expressed satisfaction in moving past the investigation, noting that the company remains committed to “transparency and integrity.” The company also disclosed that federal prosecutors have closed a separate criminal investigation into the matter without filing charges.
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