Monsanto to Pay $80 Million in Settlement With SEC
10 February 2016 - 7:20AM
Dow Jones News
Monsanto Co. agreed to pay an $80 million fine to settle federal
accusations of accounting violations related to a rebate program
for the company's trademark weedkiller Roundup.
The investigation, which Monsanto disclosed in 2011, centers on
an incentive program launched in 2009 that aimed to promote Roundup
at a time when the product was ceding market share to competitors
selling cheaper generic versions of the herbicide.
The SEC said Monsanto didn't properly account for tens of
millions of dollars in rebates the company paid to retailers and
distributors, the costs of which weren't fully reflected when
Monsanto booked Roundup sales, leading Monsanto to "materially"
misstate its earnings over a three-year period. The SEC didn't
specify the amount by which Monsanto misstated its earnings.
As part of the settlement, three accounting and sales executives
at the biotech seed giant agreed to pay a total of $135,000 in
penalties to settle individual charges, and Monsanto agreed to
retain an independent compliance consultant, the SEC said.
Monsanto agreed to the penalty while not admitting or denying
the SEC's allegations, the agency said. The accounting and sales
executives also didn't admit or deny the alleged violations.
Monsanto said the company is "pleased to put the matter behind
it" and said it was "committed to operating its business with the
utmost integrity and transparency and in compliance with all
applicable laws and regulations." The settlement didn't require
Monsanto to make any further changes to its historical financial
statements, after Monsanto already restated results for its 2009
fiscal year through the third quarter of 2011 following an
"internal investigation," the company said.
"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," Mary Jo White, chairman of the
SEC, said in a statement.
Though regulators have assessed far larger fines in some other
matters, the penalty ranks high among recent SEC accounting fraud
cases.
In addition to the settlement, Monsanto Chief Executive Hugh
Grant reimbursed the company $3.2 million for cash bonuses and some
stock awards received during the period in which the SEC said
Monsanto broke the accounting rules, according to the SEC. The
SEC's investigation found no personal misconduct by Mr. Grant, and
his voluntary return of the bonuses and awards made it unnecessary
for the SEC to attempt to force one under U.S. securities rules,
the agency said.
Monsanto said in October it set aside $93 million for potential
legal and environmental settlements, including one related to the
SEC investigation into its accounting for Roundup rebates.
Jean Eaglesham contributed to this article.
Write to Jacob Bunge at jacob.bunge@wsj.com
(END) Dow Jones Newswires
February 09, 2016 15:05 ET (20:05 GMT)
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