Securities and Exchange Commission (SEC) officials have detailed settled charges against mineral production company Compass Minerals International Inc., alleging the firm misled investors.
The SEC said Compass Minerals was ordered to pay $12 million to settle charges stemming from the company indicating a technology upgrade would reduce costs at its most significant mine, but according to the SEC, that action increased costs.
The SEC order alleges Compass Minerals repeatedly assured investors in 2017 a technology upgrade at its Goderich mine – the world’s largest underground salt mine located near Ontario, Canada, was on track to materially reduce costs and boost its operating results starting in 2018.
The SEC noted in its order that Compass’s statements were misleading because the company did not tell investors mine costs were increasing rather than decreasing – which the SEC alleged undermined the projected savings.
Additionally, the SEC noted Compass Minerals failed to properly assess whether to disclose the financial risks created by the company’s excessive discharge of mercury in Brazil.
“What companies say to investors must be consistent with what they know,” SEC Associate Director of the Division of Enforcement Melissa Hodgman said. “Yet Compass repeatedly made public statements that did not jibe with the facts on—or under—the ground at Goderich. 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.”
According to the SEC, Compass Minerals violated the antifraud, reporting, and internal controls provisions of the Securities Act and the Exchange Act and various related rules. Without admitting to the findings, the company agreed to cease and desist from further violations of those provisions and retain an independent compliance consultant to review and make recommendations regarding disclosure controls and procedures.