The SEC complaint filed Tuesday in Manhattan federal court stems from allegedly false representations made by Rio Tinto about coal assets in Mozambique that the company acquired for $3.7 billion in 2011, which were sold a few years later for just $50 million. Riversdale has predicted that the Benga project will produce some of the lowest-cost coking coal in the world.
Instead, they concealed the adverse developments, allowing Rio Tinto to release misleading financial statements days before a series of debt offerings in the US. 2010 - Mozambique's transport ministry says that Mozambique will use the Zambezi river to enable inland coal assets to get to a port, which has yet to be fully developed.
"The UK listing regime requires listed companies to adhere to high standards of disclosure and transparency. They tried to save their own careers at the expense of investors by hiding the truth", said Steven Peikin, Co-Director of the SEC's Enforcement Division.
Rio Tinto PLC (NYSE:RIO) was downgraded by investment analysts at Clarkson Capital from a "buy" rating to a "neutral" rating in a research note issued on Monday.
Shell announced that Guy Elliott was immediately leaving his position as a non-executive director at the Anglo-Dutch oil company as a result of his involvement in the legal case. Shell Chairman Charles Holiday said that the company hoped the proceedings would be resolved "satisfactorily" and, if done so, Elliott would be "considered for rejoining the board".
Rio indicated on Wednesday that it would "vigorously" defend the SEC's claims, and Mr Albanese said he was also prepared to fight the claims.
The SEC's civil complaint to the US District Court for the Southern District of NY said the fraud occurred when it failed to impair the RTCM assets in its 2011 year-end accounts in February 2012 and its interim results in August 2012. The SEC greatly appreciates the assistance and collaboration of the U.K. Financial Conduct Authority and the Australian Securities & Investments Commission.
The impairment was later reflected in Rio Tinto's 2012 year-end accounts published in January 2013, which knocked 80% off the initial value of the investment. 2013 - Rio Tinto writes off about $3.5 billion on the operation. As a result of this Albanese resigned as CEO. There were indicators of impairment for the Mozambique assets which meant that Rio Tinto was required to carry out an impairment test.
Alongside the SEC investigation, Rio Tinto received a £27.4 million fine by the UK's financial watchdog for failing to meet disclosure and transparency rules over regarding its Mozambique mining assets.
The FCA said that Rio Tinto, had it complied with its obligation to carry out an impairment test, would have impaired RTCM in its August 2012 half year results. Jefferies Group LLC set a $52.00 target price on shares of Rio Tinto PLC and gave the company a "buy" rating in a report on Friday, August 18th.
The FCA maintained that the penalty would have been a larger £39.1 million, yet had been reduced because Rio Tinto had agreed to settle more promptly. Quantbot Technologies LP purchased a new stake in Rio Tinto PLC in the first quarter valued at about $111,000.
"Rio Tinto and its top executives allegedly failed to come clean about an unsuccessful deal that was made under their watch".
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