Shares of Archer-Daniels-Midland (NYSE: ADM) are down 25% this week, according to data provided by S&P Global Market Intelligence, after the commodities trading company announced a new interim CFO amid an ongoing accounting investigation.
On ADM's abrupt CFO departure
In a press release on Sunday, ADM announced it has appointed Ismael Roig as interim CFO, following a decision by ADM's board of directors to place its previous CFO, Vikram Luthar, on administrative leave, effective immediately.
ADM added that Luthar's leave is pending an ongoing investigation by outside counsel for the company regarding "certain accounting practices and procedures [within] ADM's Nutrition reporting segment, including as related to certain intersegment transactions."
ADM initiated the investigation in response to a voluntary disclosure request from the U.S. Securities and Exchange Commission (SEC).
What's next for ADM investors?
The issue is fast becoming a contentious one; at least one investor has already (perhaps predictably) filed a lawsuit accusing the company of fraud. Various industry watchers have also observed that while ADM's Nutrition segment is responsible for less than 10% of total sales, it also has an outsized influence on the executive team's equity bonus compensation structure.
While the final outcome of the investigation has yet to be determined, ADM management has their work cut out for them in restoring investor trust as long as speculation swirls around the accounting practices in question. Until the public receives more clarity on the issue, it's no surprise to see the stock pulling back in response.
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