Traders Buy Large Volume of Rio Tinto PLC Put Options (RIO)

The Securities and Exchange Commission claims in a federal securities-fraud lawsuit that worldwide mining company Rio Tinto and former executives concealed billions of dollars lost in a bungled African coal-mine deal.

"Rio Tinto raised a total of $5.5 billion in US debt offerings that incorporated materially misleading statements and omissions concerning RTCM's valuation", the lawsuit alleges.

A spokeswoman for Elliott told CNNMoney that the former Rio Tinto chief financial officer "fully refutes" the allegations and "will be vigorously contesting them".

However, before the 2012 half year, it became apparent that Rio Tinto would not be able to use barges to transport the coal to the coast as planned and that an alternative solution - at a higher cost - would be needed to transport coal for export.

The Anglo-Australian giant bought its Mozambique assets for US$3.7 billion in 2011 and sold them for just US$50 million three years later, forced to write off $US3.0 billion from its value.

The SEC filing is seeking to achieve permanent injunctions, return of allegedly ill-gotten gains plus interest, civil penalties from all the defendants, and to bar Albanese and Elliott from serving as public company officers or directors.

According to the SEC's complaint, in 2011, Rio Tinto acquired coal assets in Mozambique shortly after disclosing huge losses associated with its previous large-scale acquisition of Alcan. 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.

Albanese served as CEO between 2007 and 2013.

As a result of the charges, Mr Elliott stood down from his role as a non-executive director at oil group Royal Dutch Shell.

In a statement, Shell said: "We hope he satisfactorily resolves those proceedings and, that in that event, he would like to be considered for rejoining the Board".


Rio Tinto was separately fined £27.4m by the UK's financial watchdog for breaching disclosure and transparency rules over its handling of the Mozambique mining assets.

Instead, Rio Tinto decided there was a "lack of clarity" around how it would develop the mines so it would not be appropriate to revalue these assets.

Rio Tinto believes that the SEC case is unwarranted and that, when all the facts are considered by the court, or if necessary by a jury, the SEC's claims will be rejected.

Rio Tinto recognised the impairment in January 2013 after an executive at the company's Technology & Innovation Group discovered the assets were being carried at an inflated rate. There were indicators of impairment for the Mozambique assets which meant that Rio Tinto was required to carry out an impairment test.

Despite internal financial modelling by Rio indicating this had destroyed the value of the acquisition, the company decided not to carry out an impairment test as it was meant to do under worldwide accounting standards.

Rio Tinto agreed to settle at an early stage of the FCA investigation, otherwise it would have been fined $51 million.

Mark Steward, FCA executive director of enforcement and market oversight, said: 'The UK listing regime requires listed companies to adhere to high standards of disclosure and transparency.

"The FCA made no findings of fraud, or of any systemic or widespread failure by Rio Tinto".

Shares in Rio Tinto are down 1.43 percent as of 11.31AM (GMT). "The case is now closed".

Related:

Comments

Latest news

U.S. seeks 'impossible' changes to NAFTA for Mexico, Canada — Toyota executive
The Brookings Institution's Dany Bahar said trade deficits are not the cause of job losses, and called the US focus misplaced. Trade Representative Robert Lighthizer said Tuesday at a press conference.

Ford recalls 1.3M F-Series pickups, including 2017 Super Duty
Affected trucks are 1.1 million in the United States, more than 222,000 in Canada and 21,000 trucks in Mexico. Ford has previously disclosed plans to spend $935 million on other recalls announced since August 2016.

Netflix subscriber surge of 5.3 million new users sends shares soaring
It has plenty of titles stacked up for the last few months of the year including a new season of its hit show " Stranger Things ". Netflix's 2018 original content budget will be between $7 and $8 billion, up from the originally-projected $6 billion.

Chicago Bulls ban Bobby Portis for punch that put team-mate in hospital
However, the Chicago Bulls had a fight at their practice yesterday that was a little worse than a typical fight between teammates. Mirotic , 26, averaged 10.6 points and 5.5 rebounds per game last season, and was expected to start for Chicago this season.

NFL won't change policy to force players to stand for national anthem
Philadelphia Eagles owner Jeffrey Lurie said on Wednesday that the meetings were "all good". And we believe, with the players, that we can help them, we can support them.

IBM's Stellar Move - IBM Debuts Blockchain Banking Across Globe
Starting early next year, IBM said it plans to invite numerous banks worldwide to join the network and help it expand. IBM's VP of Blockchain, Jesse Lund told that it is an essential next step in the evolution of blockchain technology.

'Trump's Claim Is Wrong': Comments On Presidents' Calls To Military Families Rebutted
Trump also said he was writing letters and has planned phone calls with families of four US soldiers killed in Niger on October 4. Reminded that he was brazenly lying, Trump soon after conceded that he didn't know whether Obama called these families or not.

Joel Embiid calls minutes restriction 'f-ing bulls-'
It turns out that this season, he'll still be handled carefully - despite his desire to play more. Over just 31 games, he averaged 25.4 minutes a game. "We are going to discuss it".

Putin green lights launch of the CryptoRuble
He continued: 'When buying and selling a CryptoRuble , the rate will be 13 per cent from the earned difference. The decision is taken to discourage money laundering and tricks people might play to avoid a tax.

Polestar 1: Sweden's Volvo and China's Geely unveil new electric sports vehicle
Polestars will use an app-based key, which will unlock the vehicle , enabling the pickup and drop-off service. Polestar says it will be a mid-sized BEV, and will compete with models like the Tesla Model 3.

Trump Subpoenaed by Former "Apprentice" Contestant Who Claims He Groped Her
They also said the subpoena was too broad, and demanded " irrelevant information intended exclusively to harass the President". There is one sector in particular that is thriving in Donald Trump's economy, and that is defense attorneys for Donald Trump.

Sucker punched by 26 year-old at Carolina Panthers game
Carrigan says the victim was upset about the fan in the jersey standing up throughout the game and obstructing his view. The team announced Friday it had identified the perpetrator in the video and was working with the CMPD.

IAF Takes Out Syrian Antiaircraft Battery in Retaliatory Raid
He said Russian forces were notified in real time and that Israel holds Syria responsible for any attack from its territory. Syria also claimed that the Israeli jets were targeted after then entered Syrian airspace, a claim that Israeli denied.

Hillary Clinton Still Playing the Blame Game
Hillary, please run again! "My answer was, 'I hope so!'" he tweeted just after 9 a.m. As recently as yesterday, Clinton has blamed her loss on overt sexism in America.

Hawks to net two more draft picks in trade with Cavs
In 42 appearances with Cleveland last season, he averaged 4.0 points per game while also splitting time with the Canton Charge. Jefferson was traded this week by the Cavaliers to the Atlanta Hawks and is now unemployed after the Hawks waived him.

Other news