ESG Enforcement Tracker

Key facts:

Compass accepted a civil penalty of US$12 million to settle charges brought against it by the SEC that it had misled investors about a technology upgrade that the company claimed would reduce costs at its most significant mine, but which had in fact increased costs, and that it had failed properly to assess whether to disclose the financial risks created by the company’s excessive discharge of mercury in Brazil.

The charges against Compass are detailed in the SEC’s order dated September 2022. The SEC’s order finds that Compass violated the antifraud, reporting, and internal controls provisions of the Securities Act and the Securities Exchange Act and various related rules.

According to the SEC’s order, Compass repeatedly assured investors in 2017 that a technology upgrade at its Goderich mine – the world’s largest underground salt mine – was on track to materially reduce costs and boost its operating results starting in 2018. Compass’s statements were misleading because they failed to tell investors that costs at the mine were increasing rather than decreasing, which substantially undermined the projected 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 resulted in the company failing properly to assess the financial risks of mercury contamination by one of its former facilities near the Botafogo River, in Pernambuco, Brazil, and that facility’s cover-up of the misconduct by submitting inaccurate test reports to Brazilian environmental authorities. Compass was required to assess whether it must disclose the financial uncertainties of that misconduct to investors but failed to do so.

Compass, without admitting to the findings, accepted a civil penalty of US$12 million and agreed to cease and desist from further violations. Compass also agreed to retain an independent compliance consultant to review and make recommendations concerning its disclosure controls and procedures.