Compass Minerals was ordered to pay $12 million to settle charges of misleading investors, the Securities and Exchange Commission announced last week.
The SEC’s order involved the company’s technology upgrade at its Goderich mine near Ontario, Canada, the world’s largest underground salt mine. According to the SEC, Compass repeatedly assured investors in 2017 that the upgrade would reduce costs and increase operating results for the mine. But the statements were found to be misleading because investors were not told that costs at the mine were actually increasing and the projected savings would not be as high as promised. Compass also overstated the amount of salt it was producing at the mine, the SEC said.
In addition, Compass faced charges pertaining to one of its former facilities near the Botafogo River in Pernambuco, Brazil. The SEC found that the company failed to properly assess whether to disclose the financial risks caused by the excessive discharge of mercury at the facility, and the coverup of that contamination through the submission of inaccurate test reports to Brazilian authorities. Compass was required to assess whether it must disclose the risks of that misconduct to investors.
“What companies say to investors must be consistent with what they know. Yet Compass repeatedly made public statements that did not jibe with the facts on—or under—the ground at Goderich,” said Melissa Hodgman, Associate Director of the Division of Enforcement. “By misleading investors about mining costs in Canada and failing to analyze the potential financial consequences of its environmental contamination in Brazil, Compass fell far short of what the federal securities laws require.”
Compass was found to have violated the antifraud, reporting, and internal controls provisions of the Securities Act and the Exchange Act and various related rules. The company did not admit to the findings, but did agree to the civil penalty and to cease and desist from further violations of the provisions. Compass also agreed to retain an independent compliance consultant to review its disclosure controls and procedures.
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