The Securities and Exchange Commission gave out its second-largest whistleblower award ever to a former Monsanto financial executive who alerted it to accounting violations and improper financial reporting.
The $22.44 million award represented more than 28 percent of an $80 million penalty that Monsanto agreed to in order to settle charges that it had violated GAAP and misstated corporate earnings relating to its flagship weed killer Roundup. Whistleblower awards are capped at no more than 30 percent of a penalty over $1 million.
Besides paying the penalty, Monsanto agreed to improve its accounting controls and retain an independent compliance monitor to review its accounting procedures. The company neither admitted nor denied the allegations. "Monsanto remains committed to operating its business with the utmost integrity and transparency and in compliance with all applicable laws and regulations," a spokesperson said.
According to law firm Meissner Associates, which represented the whistleblower, an SEC investigation revealed that Monsanto’s lax internal controls failed to account for tens of millions of dollars in rebates given to retailers and distributors as incentives to drive sales of Roundup.
“Company employees are in unique positions behind-the-scenes to unravel complex or deeply buried wrongdoing. Without this whistleblower’s courage, information, and assistance, it would have been extremely difficult for law enforcement to discover this securities fraud on its own,” said Jane Norberg, acting chief of the SEC’s Office of the Whistleblower, in a statement.
“I applaud the SEC for how quickly they took action in responding to my submission and the tremendous effort put forward in this case,” the whistleblower, whose anonymity is protected by the commission, said in a statement. “The agency performed an invaluable public service in creating its whistleblower program – my hope is that others will stand up for investors by doing the right thing and bring forward information related to corporate wrongdoing. I believe the case will raise awareness of the gaps that still exist today with respect to auditor independence and result in regulators looking closer at this issue and ultimately bring new rules forward to mitigate the impact this has on investors.”
“We are extremely pleased with the award granted to our client and especially with the SEC’s persistence in undertaking a highly complex investigation of accounting weaknesses at Monsanto, which aggressively fought the case all along,” said Stuart Meissner, who represented the whistleblower. He noted in a statement that his client only shared his concerns with the SEC after first trying to correct the issues internally.
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