Monsanto Settles SEC Investigation into Roundup Sales Program, Will Pay $80 Million Fine

Monsanto has settled a years-long investigation with the Securities and Exchange Commission over improper accounting of a Roundup sales incentive program.

The St. Louis-based agribusiness “neither admits nor denies” the SEC’s charges, but will pay an $80 million fine to settle the dispute, Monsanto said Tuesday in a prepared statement. According to that document, Monsanto CEO Hugh Grant and former Monsanto CFO Carl M. Casale also have agreed to pay back the company for “cash incentives and certain stock awards” from fiscal 2009 and 2010. Casale is now CEO of CHS, Inc., in Minneapolis.

According to the SEC, the agency’s “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 incentivized by the rebate programs, but failed to recognize all of the related program costs at the same time.  Therefore, Monsanto materially misstated its consolidated earnings in corporate filings during a three-year period.”

SEC Chair Mary Jo White said Tuesday the move sends a signal to corporations about their earnings communications.

“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,” White said. “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.”

Today’s announcement and settlement “(do)es not require any changes” to Monsanto’s past financial statements, the company said. However, Monsanto already restated its financials for fiscal 2009 through 2011’s third quarter after an internal investigation into the sales rebate program and its accounting.

“Monsanto is committed to operating its business with the utmost integrity and transparency and in compliance with all applicable laws and regulations,” the company said in Tuesday’s statement. “The company is pleased to put this matter behind it and remains focused on building value for its shareowners, while continuing to provide innovative technologies and products for farmers to improve farm productivity and food quality.”

Click here to read the SEC’s release on the settlement. Click here to read Monsanto’s release on the settlement.

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