SEC fines Monsanto $80million for accounting violations

13 February 2016

Editor

EU regulation

The US financial regulator, the Securities and Exchange Commission (SEC), has fined  global agri-business firm Monsanto $80 million for violating accounting rules and misstating company earnings in relation to its flagship product Roundup.  The company has also agreed to retain an independent compliance consultant in its settlement with the SEC. Three accounting and sales executives have also agreed to pay penalties to settle charges against them the SEC said.

The SEC said that its investigation found that Monsanto had insufficient internal accounting controls to properly account for millions of dollars in rebates offered to retailers and distributers of Roundup after generic competition had undercut Monsanto’s prices and resulted in a significant loss of market share for the company.  Monsanto booked substantial amounts of revenue resulting from sales incentivised by the rebate programs, but failed to recognise all of the related program costs at the same time the SEC found which meant that Monsanto had materially misstated its consolidated earnings in corporate filings during a three-year period.

“Financial reporting and disclosure cases continue to be a high priority for the Commission and these charges show that corporations must be truthful in their earnings releases to investors and have sufficient internal accounting controls in place to prevent misleading statements,” said SEC Chair Mary Jo White. “This type of conduct, which fails to recognize expenses associated with rebates for a flagship product in the period in which they occurred, is the latest page from a well-worn playbook of accounting misstatements.”

Monsanto consented to the SEC’s order without admitting or denying its findings that it violated accounting rules.

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