ADM Pays $40 Million in SEC Settlement

LINCOLN, Neb. (DTN) -- Archer Daniels Midland will pay $40 million in a Securities and Exchange Commission settlement over accounting irregularities while former CFO Vikram Luthar faces fraud charges.

Luthar resigned back in April 2024 when ADM launched an internal investigation, after the company said it found sales between company business units were reported incorrectly. This means the company overstated its annual operating profit in the nutrition segment by 9.2%.

In a complaint filed in the U.S. District Court for the District of Northern Illinois on Tuesday, the SEC alleges Luthar committed fraud and did so to give the appearance that ADM's financial situation was better than it was at the time.

"Luthar manipulated these intersegment transactions to shift operating profit from ADM's other business segments to nutrition so that nutrition would appear to be performing better than it was and meeting annual performance goals ADM had touted to the investing public," the complaint said.

Though the complaint was filed against Luthar, U.S. attorneys point to other executives in the company.

"ADM executives -- including Luthar -- routinely portrayed the nutrition segment as ADM's engine for future growth," the complaint said.

"Luthar and other ADM executives consistently represented to investors that nutrition's operating profit was projected to grow by 15% to 20% per year. Investors reacted positively to nutrition's growth prospects and analysts portrayed nutrition's operating profit growth as a key metric in evaluating an investment in ADM. Luthar and other ADM executives knew that nutrition's growth was important to investors. To amplify that message, ADM offered monetary incentives to its executives that were based on nutrition's performance."

The complaint said that even other executives in the company received bonuses based on their performance in the nutrition business.

"It was widely understood by ADM executives and employees that they should, at times, help nutrition meet its goals -- even if doing so came at the expense of their own business segment," the complaint said.

"Despite those incentives, ADM assured investors that its business segments would not receive special treatment when they transacted with each other. In periodic reports publicly filed with the SEC, ADM repeatedly told investors that ADM's intersegment transactions would be recorded at amounts 'approximating market,' i.e., as if the transactions were the result of an arm's length negotiation between unrelated parties."

The complaint said ADM promised investors that nutrition's performance, or the performance of any other business segment, would "not be artificially boosted by special benefits or backroom deals" that were not available to third parties.

In addition, federal attorneys said that contrary to ADM's representations to investors and internal policies, the nutrition segment did receive "special" treatment.

"Contrary to ADM's representations to investors, the adjustments that Luthar directed and approved did not 'approximate market' and were not the result of arm's length negotiations," the complaint said.

"The retroactive rebates and price adjustments had no basis in contractual language, were not customarily available to ADM's third-party customers, and were the product of ADM's business segments working in concert to help nutrition achieve its growth targets."

U.S. attorneys said in the complaint that Luthar's adjustments were essentially "one-sided transfers" of operating profit to nutrition with "no tangible benefit" to ADM's other segments.

"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 complaint said.

U.S. attorneys allege Luthar directly benefited from the "fraud," as he received a $130,000 cash bonus in 2022; in 2022 and 2023, "Luthar sold over $1.8 million of his personal supply of ADM stock at prices inflated" by the nutrition segment's "overstated" performance.

"Meanwhile, investors were left bearing the losses," the complaint said.

"In January 2024, ADM publicly disclosed that: (a) it had started an internal investigation into accounting practices related to nutrition's intersegment transactions; (b) it had withdrawn nutrition's forward-looking outlook; and (c) Luthar had been placed on administrative leave. The reaction to ADM's disclosure was immediate: the next trading day, ADM's share price fell by 24%."

The complaint alleges 10 counts that mostly include violations of the Securities Act.

RESOLVED INVESTIGATION

ADM said in a news release that it resolved the SEC investigation "without admitting or denying any wrongdoing."

The company said the transactions addressed in the SEC resolution affected "segment-level reporting" and "had no impact" on the company's reported consolidated balance sheet, earnings or cash flows for the periods presented in the restated filings.

President and CEO Juan Luciano, also chairman of the board, said the company was "pleased" to move beyond the investigation.

"These past couple of years have underscored what's core to ADM -- incorporating learnings to further strengthen our business," Luciano said.

"This is reflected in the extensive actions we have taken to enhance our internal controls and ensure accuracy of our financial reporting. Looking ahead, we remain committed to operating with transparency and integrity and upholding the trust of our stakeholders every day."

Junaid Zubairi, an attorney representing Luthar in the SEC case, said in a statement that the allegations against him are "meritless."

"As the SEC is aware, ADM hired experienced outside counsel to conduct an internal investigation and as publicly disclosed in ADM's March 25, 2025, proxy statement, Mr. Luthar was not found to have engaged in improper conduct," Zubairi said.

"The SEC unjustly seeks to hold Mr. Luthar accountable for long-standing business practices at ADM. The transactions in question were transparent and were considered, approved, and implemented in good faith at the company. Mr. Luthar adamantly denies the allegations levelled against him. He was not interested in a settlement with the SEC. He looks forward to establishing in court what has always been true -- that he conducted himself with integrity and professionalism during his 20-year career at ADM."

Read more on DTN: "ADM Chief Financial Officer to Resign," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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