Archer-Daniels-Midland Co. (ADM) has agreed to pay $40 million to resolve U.S. Securities and Exchange Commission allegations that the company and several former executives engaged in accounting and disclosure fraud, the SEC announced Tuesday.
The SEC separately filed a lawsuit against former ADM Chief Financial Officer Vikram Luthar, who chose not to settle. According to the SEC complaint in Illinois federal court, Luthar and other executives exaggerated the performance of ADM’s nutrition business, presenting it as a key driver of overall company growth.
“Luthar manipulated these intersegment transactions to shift operating profit from ADM’s other business segments to Nutrition so that Nutrition would appear to be: (a) performing better than it was; and (b) meeting annual performance goals ADM had touted to the investing public,” the SEC said.
ADM, former President Vince Macciocchi, and former CFO Ray Young agreed to a cease-and-desist order. The SEC stated that Macciocchi and Luthar “led efforts to identify and structure adjustments for fiscal years 2021 and 2022, and that Young negligently approved improper adjustments for fiscal years 2019 and 2021.”
ADM cooperated with the investigation and implemented remedial measures, the SEC said. ADM will pay a $40 million civil penalty, Macciocchi will pay $404,343 in disgorgement plus a $125,000 penalty, and Young will pay $575,610 in disgorgement and a $75,000 penalty. Macciocchi also faces a three-year ban from serving as an officer or director of a company. None admitted wrongdoing.
The SEC alleged that ADM executives “routinely portrayed” the nutrition segment as “ADM’s engine for future growth,” projecting operating profit growth of 15% to 20% per year. Monetary incentives tied to nutrition’s performance created pressure to meet targets at the expense of other segments.
“Despite those incentives, ADM assured investors that its business segments would not receive special treatment when they transacted with each other,” the SEC said.
However, the SEC said, adjustments Luthar directed were not “arm’s length” or market-based. “In short, when financial circumstances made it difficult for nutrition to meet its growth target, Luthar used ADM’s other business segments as nutrition’s piggybank to close the shortfall, and misled investors into believing nutrition’s growth was solely the result of its normal operations and market factors,” the commission added.
Luthar faces claims of violating anti-fraud provisions of federal securities laws and aiding ADM’s alleged violations. The SEC seeks an officer and director ban, disgorgement, civil penalties, and reimbursement of executive compensation.
ADM stated it conducted an internal investigation and voluntarily reported findings to the SEC. The company corrected prior period errors in March 2024 and restated filings for 2023 and early 2024, which “had no impact on the company’s reported consolidated balance sheet, earnings or cash flows.” ADM also strengthened its financial controls and leadership team.
Luthar’s attorney, Junaid A. Zubairi, called the SEC’s allegations “meritless” and said Luthar “adamantly denies the allegations levelled against him” and looks forward to proving his integrity in court.
Margaret A. Ryan, SEC Division of Enforcement director, said, “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.”
ADM President Juan Luciano added, “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.”
