The former CFO of ag giant Archer Daniels Midland is facing federal allegations of accounting and disclosure fraud.
In a complaint filed Tuesday in the U.S. District Court for the Northern District of Illinois, the Securities and Exchange Commission accused Vikram Luthar of artificially inflating the value of ADM’s nutrition business unit during his tenure as finance chief. The federal regulator said that Luthar directed a series of retroactive “adjustments” to the segment “with the goal of making it appear that Nutrition was meeting its performance targets.”
“Although Luthar disguised that goal using innocuous terms like ‘risk sharing’ or other euphemisms, the adjustments, in practical effect, allowed Nutrition to: (a) rewrite its sales agreements after the fact; (b) grab revenue from other business segments that it was not entitled to; (c) shed expenses it had already incurred; and (d) pick better historical prices for sales that were already completed,” the SEC’s 44-page complaint reads.
The complaint goes on to say that Luthar and other ADM executives pressured employees to “revisit Nutrition’s intersegment transactions and find rebates or other retroactive adjustments that would inflate Nutrition’s reported operating profit.”
Per the SEC, it was “widely understood” that employees should “at times, help Nutrition meet its goals – even if doing so came at the expense of their own business segment.”
Luthar, who stepped down as CFO in 2024, is alleged to have orchestrated such moves as the nutrition segment was “falling short of its operating profit targets for fiscal years 2021 and 2022,” the SEC said in a Tuesday news release. Per his LinkedIn page, Luthar became CFO of ADM in April 2022 after serving as CFO of the company’s nutrition unit.
“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 SEC’s complaint said.
ADM’s president had at one point raised concerns about a “rebate” Luthar is alleged to have directed, saying that it sounded more like a “gift” from one business segment to another. While Luthar agreed with that assessment, he said he’d prefer a “less suspicious term for the adjustment: ‘risk-sharing’,” the complaint stated.
The SEC alleged that Luthar “directly benefited” from the maneuvers, pocketing a $130,000 bonus that was partly tied to the nutrition segment hitting its profit goals.
Among the allegations, the commission charges Luthar with violating antifraud provisions of federal securities laws, as well as “aiding and abetting ADM’s violations of the antifraud, reporting, books and records, and internal accounting control provisions of the federal securities laws.”
An attorney for Luthar told the Wall Street Journal that he is fighting the allegations, and that the SEC “unjustly seeks to hold Mr. Luthar accountable for long-standing business practices at ADM.”
Meanwhile, also on Tuesday, the SEC announced that it had reached a settlement with ADM and two other executives over the allegations surrounding the nutrition unit. Though the company neither admitted nor denied the SEC’s findings, ADM agreed to pay a $40 million civil penalty, while Ray Young — another former CFO — and former President Vince Macciocchi agreed to pay “disgorgement and prejudgment interest” totaling $403,343 and $575,610, respectively.
All three parties agreed to “cease and desist from committing or causing any violations and any future violations of the relevant provisions of the federal securities laws,” the SEC said in its news release.
The SEC’s order on Tuesday establishes a “Fair Fund” that will distribute “monetary relief to investors harmed by the violations.”
Judge Margaret Ryan, director of the SEC’s Division of Enforcement, said in the release that the commission gives credit to ADM for its “cooperation and its efforts to avoid future accounting and disclosure violations.”
In a separate news release issued Wednesday, ADM’s Chair, President and CEO Juan Luciano, said that “we are pleased to put these matters behind the Company.”
ADM officials said the company had “acted to ensure that outside counsel conducted an internal investigation … voluntarily reporting the Company’s findings to the SEC’s staff.” The company in March 2024 also “corrected certain prior period errors” and restated previously issued 10-K and 10-Q forms “to address errors in its historical segment reporting.”
