# UNITED STATES OF AMERICA > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3A283de9e26912c461 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 101800 / December 3, 2024 ADMINISTRATIVE PROCEEDING File No. 3-21145 In the Matter of Compass Minerals International, Inc., Respondent. : : : : : : : NOTICE OF PROPOSED PLAN OF DISTRIBUTION AND OPPORTUNITY FOR COMMENT Notice is hereby given, pursuant to Rule 1103 of the United States Securities and Exchange Commission’s (the “Commission”) Rules on Fair Fund and Disgorgement Plans (the “Commission’s Rules”), 17 C.F.R. § 201.1103, that the Division of Enforcement has submitted to the Commission a proposed plan of distribution (the “Proposed Plan”) for the distribution of monies paid in the above-captioned matter. On September 23, 2022, the Commission issued an Order instituting and simultaneously settling cease-and-desist proceedings (the “Order”)1 against Compass Minerals International, Inc. (“Compass” or the “Respondent”). In the Order, the Commission found various disclosure violations. From 2017 to 2018, Compass made repeated misrepresentations about its plans to reduce costs and about the production levels at its Goderich salt mine. These misrepresentations were the consequence of a deficient disclosure process at the company in which statements to investors were not reviewed by personnel who were sufficiently knowledgeable about both Compass’s operations and its disclosure obligations. The failures in Compass’s disclosure controls and procedures resulted not only in material misstatements about the mine, but in the company’s senior management not having sufficient information about environmental issues caused by a facility it owned in Brazil to make appropriate determinations about disclosures. Compass calls its Goderich salt mine in Canada the “crown jewel” of its asset portfolio. Between 2015 and 2019, Compass upgraded its mining system at Goderich from drilling-andblasting to continuous mining and continuous haulage (“CMCH”) primarily in an effort to reduce costs. In 2017, Compass told investors this upgrade was “progressing on plan” and that it would generate $30 million in annual savings for the company beginning in 2018—equivalent to about a 17% increase in the company’s operating income. These statements were materially 1 Securities Act Rel. No. 11107 (Sept. 23, 2022). misleading. Goderich’s new mining system was unable to produce enough salt during this period to save the company money. To the contrary, the production shortfalls caused by the upgrade required the company to incur additional expenses that substantially increased costs for Compass, and the company’s experience implementing the upgrade showed this would continue. Compass did not disclose these facts, which substantially undermined Compass’s statements about the upgrade. In early 2018, Compass told investors the upgrade had already saved the company $5 million in 2017. This was not true. While the upgrade had reduced certain expenses by about $1 million, overall, in 2017, the upgrade had instead increased costs that year. During this period, Compass also misrepresented the amount of salt it was mining and that it was able to produce at Goderich using the installed CMCH equipment, and failed to disclose as required how the known and ongoing production shortfalls it was experiencing were reasonably expected to reduce its future operating income. After Compass disclosed in October 2018 that continuing production shortfalls at the Goderich mine were significantly impacting its financial results, the company’s share price declined significantly. In addition to these violations involving Goderich, from the fourth quarter of 2017 to the first quarter of 2022, Compass failed to adequately assess the financial consequences of a recently acquired subsidiary’s failures to comply with environmental regulations in Brazil. Finally, Compass filed materially misstated financials due to its use of a salt interim inventory accounting methodology that did not comply with Generally Accepted Accounting Principles (GAAP). The Commission ordered the Respondent to pay a $12,000,000.00 civil money penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty collected can be distributed to harmed investors (the “Fair Fund”). The Fair Fund includes the $12,000,000.00 collected from the Respondent. The assets of the Fair Fund are subject to the continuing jurisdiction and control of the Commission. The Fair Fund and has been deposited in a Commission-designated account at the U.S. Department of the Treasury, and any interest accrued will be added to the Fair Fund. OPPORTUNITY FOR COMMENT Pursuant to this Notice, all interested persons are advised that they may obtain a copy of the Plan from the Commission’s public website at https://www.sec.gov/litigation/fairfundlist.htm. Interested persons may also obtain a written copy of the Proposed Plan by submitting a written request to Devon Anthony Brown, United States Securities and Exchange Commission, 100 F St., N.E. Washington, DC 20549 or Brownde@SEC.gov. All persons who desire to comment on the Proposed Plan may submit their comments, in writing, no later than thirty (30) days from the date of this Notice: 1. to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; 2. by using the Commission’s Internet comment form (https://www.sec.gov/litigation/admin.shtml); or 3. by sending an e-mail to rule-comments@sec.gov. Comments submitted by email or via the Commission’s website should include “Administrative Proceeding File No. 3-21145” in the subject line. Comments received will be publicly available. Persons should submit only information they wish to make publicly available. THE PROPOSED PLAN The Net Available Fair Fund2 is comprised of the $12,000,000.00 in civil money penalties collected from the Respondent, plus any interest and income earned thereon, less taxes, fees, and expenses. The Proposed Plan provides for the distribution of the Net Available Fair Fund to investors who were harmed, by the Respondent’s conduct described in the Order, in connection with various disclosure violations. As calculated using the methodology detailed in the Plan of Allocation attached as Exhibit A to the Proposed Plan, investors will be compensated for their losses on shares of Compass common stock that were purchased or acquired between March 2, 2017, and October 22, 2018, inclusive, due to the misconduct of the Respondent. For the Commission, by the Division of Enforcement, pursuant to delegated authority.3 Vanessa A. Countryman Secretary 2 All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Proposed Plan. 3 17 C.F.R. § 200.30-4(a)(21)(iii). --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3A283de9e26912c461. Public record. Not legal advice.