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ADM accounting practices under investigation – Bloomberg

The US Attorney’s Office in Manhattan, New York, has launched an investigation into the accounting practices at ADM, reports Bloomberg. Anonymous sources told Bloomberg that the probe is focused on the ADM's nutrition business. Last month, ADM caused a stir in the commodities sector by suspending its CFO Vikram Luthar, and revising its earnings forecast. An external investigation took place regarding certain accounting practices within the company's nutrition reporting segment, including related intersegment transactions. Following the announcement of the suspension, the company's stock dropped by approximately 20%. The inquiry into the company was initiated following a request from the US Securities and Exchange Commission. Now, with the Jusitce Department's involvement, there are heightened concerns about potential legal ramifications for ADM's reporting practices, raising questions about the consequences of the internal events. Both ADM and the US Justice Department declined to comment on the investigation. Although nutrition remains a minor aspect of ADM's operations, Bloomberg reports it has disproportionately influenced recent executive bonuses. The ongoing turmoil has exacerbated investors' longstanding fears that large, complex corporations are susceptible to the threat of undisclosed manipulation of critical financial data. In a memo released last month, Juan Luciano, ADM’s chairman of the board and CEO, provided clarification regarding the ongoing investigation within the company. Luciano underscored that the focus of the investigation was on the "transfer of goods and associated financial accounting between business segments." He emphasised that while these transactions were being closely scrutinised, the findings were not expected to significantly impact the crop trader's earnings. ADM's market value has plummeted by nearly $8 billion since the investigation was made public.


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