The U.S. Securities and Exchange Commission fined Archer Daniels Midland $40 million after the agency found former high-ranking executives artificially inflated the value of one of its businesses.
The fine, handed down on Jan. 27 as part of a settlement with the company, relates to ADM’s Nutrition business, which the company had touted as a significant moneymaker to investors. However, as the business failed to meet profit projections, ADM’s chief financial officer shifted funds from other company ventures into Nutrition so it “would appear to be … performing better than it was,” according to the SEC.
ADM did not admit wrongdoing, and the SEC noted ADM voluntarily agreed to cooperate.
our 2024 coverage
ADM trumpeted its nutrition and flavor business. Now the government’s investigating.
In January 2024, ADM placed its chief financial officer, company veteran Vikram Luthar, on administrative leave. Later that year, the company corrected publicly available financial statements from 2023 and 2024.
The U.S. Department of Justice had been pursuing a sprawling criminal investigation into ADM since at least February 2024, including obtaining grand jury testimony from more than three dozen current and former employees, according to a Reuters investigation. But ADM announced the DOJ had dropped the case in a Jan. 27 press release.
The U.S. Attorney’s Office for the Southern District of New York, which was handling the case, did not immediately respond to a request for comment.
An ADM investor also sued the company over the fraudulent accounting, and the case is ongoing.
In a statement, ADM’s president, CEO and board chair, Juan Luciano, said the company was pleased the government investigations were over.
“These past couple of years have underscored what’s core to ADM – incorporating learnings to further strengthen our business,” he 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.”
Separately, the SEC filed a complaint against Luthar on Jan. 27, alleging his central role in the accounting fraud.
Luthar’s attorney, Junaid Zubairi, said in a statement that the allegations against his client are “meritless” and “one-sided.” An internal investigation by ADM found Luthar had not engaged in improper conduct, said Zubairi, who works for the white-collar defense firm Vedder.
“The SEC unjustly seeks to hold Mr. Luthar accountable for long-standing business practices at ADM,” he said. “The transactions in question were transparent and were considered, approved, and implemented in good faith at the company.”
The SEC named two other ADM executives who were part of the effort to inflate Nutrition’s performance. Vincent Macciocchi helped Luthar identify profits that could be moved, and Ray Young approved the improper adjustments, according to the SEC.
Macciocchi agreed to pay investors more than $400,000 he made through the illegal scheme, and Young agreed to pay investors more than $500,000, according to the SEC. Macciocchi’s attorney declined to comment. Young’s attorney did not respond to a request for comment.
Zubairi said Luthar was not interested in settling with the SEC and looked forward to his day in court.
The last time the SEC and DOJ levied a fine against ADM was 2013. Its subsidiary pleaded guilty to violating the Foreign Corrupt Practices Act and paid a $17 million fine, according to federal documents discovered through RiskMinr, an agribusiness data and document search tool created by Investigate Midwest.
Nutrition business became ADM’s ‘engine for future growth’
ADM, one of the world’s largest companies, processes grains such as soybeans and corn. Its products end up in everything from toothpaste to Coca-Cola.
Prices for commodities like soybeans and corn are generally seen as volatile, as weather conditions and changing government policies can affect prices. This can affect ADM’s bottomline. For instance, in early 2025, ADM fired hundreds of employees as it aimed to recover from dropping commodity prices, according to the Financial Times.
Given the risk commodities pose, ADM sought to grow its food processing business. This part of ADM focuses on, among other things, developing new flavors for snacks and frozen meals. In 2014, ADM purchased a European flavor company, and, in 2019, food processing, named Nutrition, became one of its three main businesses.
“ADM recognized that investors viewed food processing companies as having higher growth potential (and less volatile earnings) than ADM’s traditional, commodities-based business,” the SEC’s complaint reads.
Luthar and other ADM executives “routinely portrayed” the business as “ADM’s engine for future growth,” according to the SEC’s complaint. ADM consistently said Nutrition’s operating profit would grow 15-20% per year. Stock market analysts understood Nutrition to be a “key metric” in evaluating whether ADM was a good investment.
Nutrition was so important that ADM offered bonuses to executives based on its performance. Bonuses were even available to executives running other parts of ADM’s 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,” according to the complaint.
Nutrition used other ADM businesses as ‘piggybank,’ SEC says
ADM’s three main businesses routinely made transactions between one another. For example, Nutrition bought soy or corn products from the other company arms. Then, Nutrition processed the ingredients into products it sold.
The transactions were disclosed in public documents. ADM repeatedly told investors that the profits moved into Nutrition were at amounts “approximating market.” Essentially, this portrayed the transactions as normal, “arm’s length negotiations between unrelated parties,” according to the SEC.
“In short, ADM promised investors that Nutrition’s performance … would not be artificially boosted by special benefits or backroom deals that were not available to third parties,” the SEC alleges in the complaint.
However, the Nutrition business soon received “special treatment,” according to the SEC. This made ADM’s other businesses Nutrition’s “piggybank.”
Fraud began before Luthar assumed ‘central role’
ADM began “fraudulently shifting” profit to Nutrition in 2019, prior to Luthar being named the business’s chief financial officer, according to the complaint. Once installed, he continued the practice, the SEC alleges.
That year, ADM executives realized Nutrition was in danger of missing its publicly stated financial goal. To make up the difference, executives shifted $4.7 million of operating profit from another business to Nutrition in the form of rebates.
The rebates had not been included in the original contract between ADM’s two businesses, and it did not benefit the other ADM business. The transaction resulted in Nutrition buying a product below cost, according to the SEC.
The complaint states Luthar was not directly involved in the maneuver, but he would soon take a “central role.”
ADM’s financial incentives led others to be ‘severely motivated’ to help Nutrition
In 2020, Nutrition faced missing its goals once again.
It had purchased a product made from soybeans called white flake, which can be used to provide protein in animal feed. The contract between Nutrition and the other ADM business reflected the current market price for soybeans, according to the complaint. However, in late 2020, the commodity’s price increased. Nutrition had already sold its product based on the lower commodity price, and it risked losing money.
Recently promoted to Nutrition’s chief financial officer, Luthar told ADM’s leadership about the situation. Who exactly he told is not stated in the complaint.
Some executives suggested ADM publicly revise its growth projections, according to the complaint. Instead, the SEC alleges, Luthar executed a plan that retroactively locked in the lower soybean price, allowing Nutrition to meet its forecasted financial goals.
The SEC says there was a financial incentive to help Nutrition. According to the complaint, Luthar’s boss told him the head of one of ADM’s other businesses “is willing to work with us on white flake too. We spoke privately last night and he is severely motivated by (ADM’s performance incentive plan) to help us.”
Luthar then led a series of meetings in February and March 2021 about how to justify the transaction, according to the complaint. Who attended the meetings is not noted in the complaint. Eventually, it was decided the transaction, which totaled about $20 million, would again be a rebate.
Luthar’s boss said calling the transaction a “rebate” made it sound like a “gift,” according to the complaint. Luthar suggested the term “risk sharing.”
Without the adjustment, the growth in operating profit would have been 17%, instead of the promised 20%, according to the SEC’s calculations.
In 2022, ADM promoted Luthar to chief financial officer for the entire company. He received a cash bonus of $130,000 based, in part, on Nutrition’s performance, according to the complaint.
Nutrition started ‘begging for money’
Once again in 2022, Nutrition faced financial headwinds. Luthar asked ADM executives to find $10 million to $20 million — the amount needed to meet the annual growth it promised investors — the company could shift to Nutrition’s balance sheet, according to the complaint.
Internally, Nutrition’s president said the business’s finances were a “disaster” and “we need to stop the bleeding.” Luthar asked Nutrition executives to “find some relief,” while executives at ADM’s other businesses complained Nutrition was “begging for money,” according to the complaint.
Still, Nutrition’s performance was a “corporate priority,” according to the complaint.
In late 2022, Luthar attempted to push through two other transfers to Nutrition, but ADM’s controller, a corporate position that ensures financial transactions are legal and accurate, rejected them, according to the SEC.
The controller told a colleague, “I get the impression (Luthar) is pretty angry with me.” She added, “I cant (sic) take many more angry calls(.) I had been warning everyone about this.”
Eventually, the controller approved the transfers.
Despite the internal acknowledgement of Nutrition’s struggles, ADM told investors the business was on track. During a January 2023 earnings call, Luthar said, “The Nutrition business continued its strong growth trajectory in 2022.”
In 2022 and 2023, Luthar sold more than $1.8 million of his ADM stock, according to the complaint.
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