By Karl Plume and Chris Prentice
WASHINGTON, Jan 27 (Reuters) – Grain trader Archer-Daniels-Midland Company will pay a $40 million civil penalty after the U.S. Securities and Exchange Commission charged it and two of its former executives with inflating the performance of a key business segment, the regulator said on Tuesday.
With the agreement, the U.S. Department of Justice closed a related criminal probe without bringing charges.
The resolution concludes years-long government investigations into accounting issues at ADM that forced the grain trader to twice revise its financial reports, prompting share losses and leading to shareholder litigation.
The settlement includes charges brought against former executives Vince Macciocchi and Ray Young.
A lawyer for ADM did not respond immediately to a request for comment, but in a statement on the company’s website, CEO Juan Luciano said the company is pleased to put the matter behind them and has taken “extensive actions” to enhance internal controls. Lawyers for Young and Macciocchi also did not respond immediately to requests for comment.
ADM shares were up 0.34% in after-hours trading on Tuesday.
Federal prosecutors opened a probe in early 2024 into accounting issues at ADM tied to the performance of its highly touted “Nutrition” unit, Reuters previously reported. The government investigations as well as an internal inquiry led to the exit of ADM’s former chief financial officer.
The investigation involved internal company transactions that inaccurately reported financial results for the “Nutrition” unit, which was launched in 2018 to accelerate development of high-value specialty ingredients for the food, beverage and animal feed industries.
News of the accounting irregularities broke in early 2024, sending ADM shares plummeting and heaping pressure on top executives, including Luciano, as top executive compensation had been tied to growth in the Nutrition unit.
The investigation into “intersegment” transactions between the company’s business segments focused on whether ADM deliberately boosted Nutrition’s performance by providing it with below-cost goods from other company units.
The SEC considered ADM’s cooperation in accepting the settlement offer, the regulator said in a statement.
Specifically, the company conducted an internal investigation, voluntarily reported its findings to agency staff, and provided the staff with additional analyses from an outside accounting expert.
ADM’s remedial measures included implementing new internal accounting controls around intersegment transactions, amending its policies and procedures, and testing the effectiveness of its new controls, among other things, the SEC said.
