Rio Tinto to pay $28M settlement in SEC fraud case (NYSE:RIO)
Rio Tinto (NYSE:RIO) agreed to pay a $28M fine to settle an SEC lawsuit that accused it of fraud in handling a failed investment in a Mozambique coal project, ending a civil lawsuit filed six years ago, Reuters reported late Friday.
Former CEO Tom Albanese agreed to pay a $50K civil fine to settle related SEC claims; neither he nor the company admitted wrongdoing, while former CFO Guy Elliott remains a defendant.
The defendants had been accused of deceiving investors about the value of Rio Tinto Coal Mozambique, which was purchased in 2011 for $3.7B through a takeover of the former Riversdale Mining.
The SEC said Rio Tinto (RIO) was later able to raise more than $5.5B from unsuspecting U.S. investors by overvaluing the coal assets, despite an internal assessment that the assets were worth negative $680M.
Albanese was accused of misleading investors by describing the Moatize Basin, where Rio Tinto Coal Mozambique was located, as a world-class basin coal deposit.
Rio Tinto (RIO) took a $3B-plus writedown on the deal in 2013 and sold the assets in late 2014 for $50M.