Monsanto settles SEC investigation by paying 80-million-dollars fine according to recent statements by the Securities and Exchange Commission (SEC) and Monsanto Inc.
The Securities and Exchange Commission charged Monsanto Inc. for improper accounting concerning the Roundup sales incentives program. As other companies started selling general herbicides at lower prices than Monsanto’s Roundup, the St. Louis-based agribusiness offered rebates to distributors and retailers to undercut competition.
The improper accounting impacted Monsanto Inc.’s financials starting with 2009 through the third quarter of 2011. Losing market share prompted the major agribusiness to offer rebates to distributors and retailers for the Roundup herbicide. The sales were recorded thoroughly. However, the rebates weren’t accounted for until the following year.
Now, Monsanto settles SEC investigation by paying 80-million-dollar fine. The years-long investigation conducted by the Securities and Exchange Commissions is thus settled. According to an official statement released by Monsanto Inc,. the company ‘neither admits nor denies’ the charges put forth by the SEC. Nonetheless, despite 80-million dollars in settlements, the CEO of Monsanto, Hugh Grant and the former CFO of Monsanto, Carl M. Casale are also set to pay back the company for
“cash incentives and certain stock awards”.
The investigation conducted by the Securities and Exchange Commission found the large agribusiness lacked sufficient internal accounting controls. This resulted in improper accounting for millions in rebates during the 2009-2011 period. Monsanto Inc. secured substantial revenue from offering rebates for the Roundup herbicide. However, the company failed to account for all the related costs at the same time. According to the SEC statement:
“Monsanto materially misstated its consolidated earning in corporate filings during a three-year period”.
Although Monsanto Inc.’s statement is clear about neither recognizing nor denying the SEC’s charges, the Chair of the SEC, Mary Jo White stated that this should be a stand-out signal for all corporations regarding their earning communications.
According to Mrs. White, corporations are required to be truthful when it comes to their earnings releases. Investors deserve to have a hands-on release based on internal accounting controls that can prevent misleading statements.