Investors sue ADM after company placed CFO on leave amid accounting probe, SEC investigation

ADM's plant in southwest Cedar Rapids. CREDIT RICHARD PRATT

A group of investors has moved to sue Archer Daniels Midland (ADM) after the company placed its chief financial officer on administrative leave amid an investigation of the company’s accounting practices.

The litigation, announced Feb. 5 and filed by Herman Bergan, a national trial attorney firm, focuses on Archer Daniels Midland’s statements about the performance of its nutrition segment, a business the company poured billions of dollars into to protect against commodity price volatility in its legacy agricultural commodities trading business.

According to a news release, the complaint alleges ADM made misleading statements and concealed that: (1) the nutrition segment’s financial reporting and accounting practices did not provide investors with an accurate impression of the company’s performance and future prospects, including reported operating profits; (2) the nutrition segment’s accounting practices created a heightened risk of regulatory scrutiny and adverse impacts to the company’s business; and (3) based on the foregoing, the defendants lacked a reasonable basis for their positive statements about the nutrition segment and related financial results, growth, and prospects.

On Jan. 21, ADM announced that it had placed Vikram Luther, its chief financial officer, on leave effective immediately. The company said that Mr. Luther’s “leave is pending an ongoing investigation being conducted by outside counsel for ADM and the Board’s Audit Committee regarding certain accounting practices and procedures with respect to ADM’s Nutrition segment, including as related to certain intersegment transactions.”

ADM revealed that its investigation was initiated in response to its receipt of a voluntary document request by the SEC. The company also stated that it is delaying its Q4 and FY 2023 earnings release and withdrew its outlook for the nutrition segment.

The news sent the price of ADM shares crashing as much as $14.46 (or about 21%) lower during intraday trading Jan. 22. The price has since rebounded somewhat, with shares trading at $53.95 as of midday Feb. 5.