Archer-Daniels-Midland Company

Archer-Daniels-Midland Company (ADM) Failed to Disclose its Improper Accounting Practices

A shareholder filed a class action on behalf of all persons and entities that purchased or otherwise acquired Archer-Daniels-Midland Company (NYSE: ADM) stock between April 30, 2020 and January 22, 2024. Archer Daniels is an agricultural supply chain manager and processor that operates through three main business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The Nutrition segment is engaged in the manufacturing, sale, and distribution of a range of ingredients and solutions, including plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, and other specialty food and feed ingredients. 

According to the complaint, during the class period, defendants made positive statements about the Nutrition segment as a future profit-driver for the Company, with the ability to capitalize on healthier eating trends and rising consumer demand for natural ingredients and flavoring. Defendants also created the impression that the Nutrition segment’s growth would provide more diversification and earnings stability for Archer Daniels. 

Unbeknownst to investors, however, the Nutrition segment’s ostensibly impressive growth from 2020 through 2022 was inaccurate and subject to improper accounting practices. Plaintiff alleges that during the class period, defendants were incentivized to create the appearance of a diversified business by inflating the performance of the Nutrition segment, and the individual defendants were further incentivized by stock awards that were directly tied to the performance of the Nutrition segment from 2020 to 2022. As a result, Archer Daniels’ business and prospects were much worse than represented, causing the price of its common stock to trade at artificially inflated levels during the class period.  

On January 21, 2024, Archer Daniels announced that it had placed its CFO Vikram Luther on leave effective immediately.  The Company said that 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.” The Company also revealed that its investigation was initiated in response to its receipt of a voluntary document request by the SEC. As a result, Archer Daniels delayed its Q4 and FY 2023 earnings release and withdrew its outlook for the Nutrition segment. On this news, the price of Archer Daniels common stock declined by $16.23 per share, or approximately 24%, from $68.19 per share to close at $51.69 on January 22, 2024, wiping out approximately $8.8 billion of Archer Daniels’ market value.

What Now: Similarly situated shareholders may be eligible to participate in the class action against Archer-Daniels-Midland Company. Shareholders who want to act as lead plaintiff for the class should contact Robbins LLP. Plaintiffs must file their lead plaintiff papers by March 25, 2024. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.  You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member.

All representation is on a contingency fee basis. Shareholders pay no fees or expenses. 

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