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SEC Charges Company With Providing Inaccurate Earnings Release

Nov. 25, 2019

File No. 3-19607

Washington, D.C., November 25, 2019 — The Securities and Exchange Commission today charged an Indianapolis-based producer of specialty hydrocarbon products with providing an inaccurate and misleading earnings release.

According to the SEC’s order, in late 2017 Calumet Specialty Products Partners, L.P. implemented a new enterprise resource planning (“ERP”) system, which resulted in various operating and reporting disruptions, including limitations on the company’s ability to maintain an effective internal control environment and meet external reporting deadlines. The SEC’s order finds that Calumet was seven weeks late filing its financial results for the third quarter of 2017 and, in that filing, announced two material weaknesses in internal control over financial reporting (“ICFR”). Calumet’s ERP implementation issues and weaknesses in ICFR continued into March 2018: Calumet’s independent auditor noted on March 1 that Calumet’s pervasive ERP system issues had resulted in a delay in the company’s financial statement close process and execution of certain financial statement controls.

On March 8, despite the company’s ERP implementation and internal control issues, Calumet issued an earnings release announcing its 2017 financial results. Eleven days later, however, Calumet disclosed that it expected its 2017 financial results to differ from what the company had reported in the March 8 earnings release. Calumet’s shares declined over eight percent that day. On April 2, Calumet filed its 2017 Annual Report, which disclosed financial results that were materially different from what had been reported in the March 8 earnings release. For example, Calumet’s earnings release had under-reported the company’s 2017 net loss by eighteen percent.

Without admitting or denying the findings, Calumet consented to the entry of the SEC’s order, which found that Calumet violated Section 13(a) of Securities Exchange Act of 1934 and Rules 12b-20 and 13a-11 thereunder, and ordered it to pay a penalty of $250,000.

The investigation was conducted by Greg Hillson and Jeffrey Anderson and supervised by Peter Rosario, Yuri B. Zelinsky, and Antonia Chion.

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