In the Matter of Covia Holdings Corp., et al.
Admin. Proc. File No. 3-20163
On December 8, 2020, the Commission instituted and simultaneously settled cease-and-desist proceedings (the “Order”) against Covia Holdings Corp. (“Covia”) and Fairmount Santrol Holdings, Inc. now known as Bison Merger Sub I, LLC (“Fairmount”) (collectively, the “Respondents”) for violations arising from materially false and misleading statements relating to the performance and commercial potential of high-margin proppant products the Respondents were developing and selling. According to the Order, the Respondents’ materially false and misleading statements about these products appeared in offering documents in connection with its 2014 initial public offering and two subsequent offerings in 2016; in annual, quarterly, and current reports filed with the Commission; in presentations to investors and analysts; and on the company’s website. At the end of June 2020, Covia, and its U.S. subsidiaries, including Fairmount, filed voluntary petitions for Chapter 11 bankruptcy reorganization.
The Commission ordered the Respondents to pay, jointly and severally, a $17 million civil penalty, which shall be deemed satisfied by a cash payment from Covia in the amount of $1 million pursuant to Covia Holdings Corporation and its Debtor Affiliates’ confirmed Chapter 11 plan or an order of the bankruptcy court allowing such claim and authorizing such payment. A Fair Fund has been established, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty collected can be distributed to investors harmed by the Respondents’ conduct described in the Order. See the Commission’s Order: Release No. 33-10897.
The Fair Fund comprised of the $1 million paid by Covia has been deposited in an interest-bearing account at the U.S. Treasury, and all interest accrued will be added to the Fair Fund.
On February 21, 2021, the Commission issued an order appointing Miller Kaplan Arase LLP as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-91187.
On June 21, 2021, the Commission issued an order appointing Analytics Consulting LLC, as the Fund Administrator to oversee the administration and distribution of the Fair Fund and, set the administrator’s bond amount. See the Commission’s Order: Release No. 34-92211.
On November 16, 2021, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-93579 and the Proposed Plan.
The Proposed Plan provides that the distribution of the Fair Fund shall be made to those investors who held eligible securities as of the relevant date and suffered a recognized loss as calculated by the methodology used in the Plan of Allocation, attached as Exhibit A to the Proposed Plan.
On January 13, 2021, the Commission issued an order approving the Proposed Plan and simultaneously posted the approved plan of distribution (the “Plan”). See the Commission’s Order: Release No. 34-93981 and the plan.
For more information, please contact the Commission:
Office of Distributions