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Washington, DC–(Newsfile Corp. – Sept. 23, 2022) – The Securities and Exchange Commission today announced the settlement of charges against Compass Minerals International Inc. for misleading investors about an update. level of technology that the company claimed would reduce costs at its largest mine, but in reality had increased costs, and for failing to properly assess whether to disclose the financial risks created by excessive mercury releases of the company in Brazil. Compass is ordered to pay $12 million to settle the charges.
According to the SEC order, Compass repeatedly assured investors in 2017 that a technology upgrade at its Goderich mine, the world’s largest underground salt mine located near Ontario, Canada and hailed by the company as its crown jewel, was on track to significantly reduce costs and increase operating results beginning in 2018. Compass’ statements were misleading because they did not tell investors that costs of mine were increasing rather than decreasing, significantly compromising the planned savings. The SEC also found that Compass misled investors by overstating the amount of salt it was able to produce at Goderich.
Separately, the order finds that Compass’s deficient disclosure controls prevented the company from properly assessing the financial risks of mercury contamination from one of its former facilities near the Botafogo River in Pernambuco, Brazil. , and that the facilities concealed the misconduct by submitting inaccurate test reports to Brazilian environmental authorities. Compass was required to assess whether to disclose the financial uncertainties of this misconduct to investors, but failed to do so.
What companies tell investors should be consistent with what they know. Yet Compass repeatedly made public statements that did not match the facts on or underground at Goderich, said Melissa Hodgman, associate director of the Enforcement Division. By misleading investors about mining costs in Canada and failing to analyze the potential financial consequences of its contamination in Brazil, Compass fell far short of meeting the requirements of federal securities laws.
The SEC order finds that Compass violated the antifraud, reporting, and internal control provisions of the Securities Act and the Exchange Act and various related rules. In addition to the civil penalty, Compass, without admitting the findings, has agreed to cease and desist any further violations of these provisions and to retain the services of an independent compliance consultant to review and make recommendations regarding its disclosure controls and procedures.
The SEC investigation was led by Joseph Zambuto Jr., Michael Grimes and John Archfield with the assistance of trial attorneys Devon Staren and Fred Block. The case was supervised by Rami Sibay.