Archer-Daniels-Midland Company will pay a $40 million civil penalty to resolve charges brought by the U.S. Securities and Exchange Commission that the company and two former executives misreported the performance of a major business segment, the regulator said on Tuesday. In connection with the settlement, the U.S. Department of Justice closed a related criminal investigation without bringing criminal charges.
The agreement ends years-long government scrutiny into accounting practices at ADM that required the company to revise its financial statements on two occasions, weighed on the stock and spurred shareholder lawsuits. The settlement also names former executives Vince Macciocchi and Ray Young in the charges.
A request for comment to a lawyer for ADM did not receive an immediate response. Separately, the company posted a statement on its website attributed to CEO Juan Luciano, saying ADM is pleased to put the matter behind them and that it has taken "extensive actions" to bolster internal controls.
Requests for comment to lawyers for Young and Macciocchi were not immediately answered. The U.S. Attorney's Office in Manhattan also did not immediately respond to requests for comment about the closing of the criminal inquiry.
Shares of ADM were reported up 0.34% in after-hours trading on Tuesday.
Federal prosecutors opened an investigation in early 2024 into accounting irregularities tied to the performance of ADM's Nutrition unit. The Nutrition segment, launched in 2018 to accelerate development of high-value specialty ingredients for food, beverage and animal feed customers, had been a focal point of the company's growth story.
The probes, along with an internal review, led to the departure of ADM's former chief financial officer. Investigators examined internal, so-called intersegment transactions to determine whether Nutrition's results were artificially enhanced by transfers of goods from other ADM units at prices below cost.
The SEC noted ADM's cooperation in reaching the civil settlement. The company carried out an internal investigation, voluntarily shared its findings with agency staff and provided additional analyses prepared by an outside accounting expert, according to the regulator. Those steps were considered in the SEC's decision to accept the settlement offer.
As part of remedial measures, ADM implemented new internal accounting controls specifically around intersegment transfers, revised its policies and procedures, and tested the effectiveness of the new controls, among other actions cited by the SEC.
The civil penalty and the closing of the criminal probe together bring formal government attention in this matter to a close, while leaving intact the factual findings and the company actions documented in filings and the SEC statement. The settlement completes a chapter of enforcement and corporate remediation that followed the disclosure of accounting irregularities earlier in the year, which had driven a sharp market reaction and intensified scrutiny of executive compensation linked to Nutrition's performance.
Key factual developments:
- ADM will pay a $40 million civil penalty to resolve SEC charges regarding misreported results for its Nutrition unit.
- The DOJ closed a related criminal probe without bringing charges.
- The resolution follows internal and external investigations that prompted two restatements of financial results and the exit of the company’s former CFO.