(Updates with a comment from Monsanto, more background)
By Sarah N. Lynch
WASHINGTON, Feb 9 (Reuters) - Monsanto Co will pay $80 million to settle civil accounting violations after it allegedly misstated its earnings in connection with its top-selling Roundup product, U.S. securities regulators said on Tuesday.
The Securities and Exchange Commission also said that three accounting and sales executives have also agreed to settle charges in connection with the case.
The SEC’s case against Monsanto revolves around a corporate rebate program designed to boost sales of Roundup, a popular weed killer. The rebate program was created to combat rising generic competition which threatened to cut into the company’s profits.
The agency said that Monsanto had insufficient internal controls to account for millions of dollars in rebates that it offered to retailers and distributors. It ultimately booked a sizeable amount of revenue, but then failed to recognize the costs of the rebate programs on its books.
That led the St. Louis-based agriculture company to “materially” misstate its consolidated earnings for a three-year period.
In a statement, the company said it fully reserved funds to pay for the penalty in fiscal year 2015.
Monsanto added that it is not required to change any of its historical statements because the company already previously in 2011 restated its financial statements for fiscal year 2009 through the third quarter of fiscal year 2011.
“Public companies need to have robust systems in place to ensure that all of their transactions are recognized in the correct reporting report,” said Scott Friestad, the SEC’s associate director for the enforcement division.
In agreeing to settle, Monsanto neither admitted nor denied the charges, which include fraud. The agency did not charge the company with knowingly committing the violations.
Monsanto accounting executives Sara Brunnquell, Anthony Hartke and then-sales executive Jonathan Nienas also each agreed to pay penalties.
Brunnquell and Hartke will also be temporarily suspended from acting as accountants for public companies.
Attorneys for Brunnquell and Hartke did not have any immediate comment. An attorney for Nienas could not be immediately reached.
The SEC said it did not uncover any personal misconduct by Monsanto CEO Hugh Grant or former Chief Financial Officer Carl Casale.
Grant and Casale previously reimbursed the company for cash bonuses and stock awards they received during the periods the violations occurred. (Reporting by Sarah N. Lynch and Lisa Lambert; Editing by Eric Walsh, Marguerita Choy and Diane Craft)