Former ADM executives Vince Macciocchi and Ray Young settled without admitting or denying the findings, the agency said. The SEC filed a contested complaint against former executive Vikram Luthar in federal court in Chicago.
The charges concern fiscal years 2019, 2021, and 2022, when ADM had projected 15% to 20% annual operating profit growth for the Nutrition business, according to the SEC. The agency alleges executives used improper "adjustments" to meet those targets.
The SEC's complaint against Luthar alleges he directed retroactive rebates and price changes in transactions between Nutrition and other ADM segments that were "essentially one-sided transfers of operating profit to Nutrition, with the goal of making it appear that Nutrition was meeting" its growth targets.
The settled order against ADM, Macciocchi, and Young finds that the adjustments were "targeted to specific dollar amounts to hit Nutrition's operating profit goals or mask a shortfall." The order states the adjustments were not offered to third-party customers, which the SEC said made them inconsistent with ADM's representations that intersegment transactions were recorded at amounts "approximating market."
ADM's $40 million penalty will be paid into a Fair Fund for distribution to harmed investors, the SEC said. Macciocchi agreed to disgorgement and interest of $404,343, a $125,000 penalty, and a three-year officer and director bar. Young agreed to disgorgement and interest of $575,610 and a $75,000 civil penalty.
The agency credited ADM's cooperation, saying the company ran an internal investigation, voluntarily reported findings, and submitted analyses from an outside accounting expert. ADM also implemented new internal accounting controls around intersegment transactions, amended policies and procedures, and tested the new controls, according to the SEC.
Luthar faces potential permanent injunctions, an officer and director bar, disgorgement with interest, civil penalties, and required reimbursement of executive compensation under Sarbanes-Oxley clawback provisions, the SEC 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," said Margaret A. Ryan, Director of the SEC's Division of Enforcement. Ryan added that the agency "is steadfast in its commitment to rooting out fraud and holding accountable wrongdoers, while also engaging market participants constructively to ensure the right outcomes are achieved in a timely and fair manner."
The allegations against Luthar have not been tested in court.