U.S. judge says SEC may pursue Rio Tinto fraud case
A U.S. judge on Monday rejected Rio Tinto Plc`s bid to dismiss a Securities and Exchange Commission lawsuit accusing the Anglo-Australian mining company of civil fraud in its handling of a failed investment in a Mozambique coal project.
U.S. District Judge Analisa Torres in Manhattan said the SEC may pursue some of its claims in the October 2017 lawsuit, which also charged former Chief Executive Officer Tom Albanese and former Chief Financial Officer Guy Elliott with fraud.
The SEC accused the defendants of inflating the value of Mozambique coal assets that Rio Tinto bought in 2011 for $3.7 billion, through a takeover of the former Riversdale Mining.
By waiting until January 2013 to take a more than $3 billion writedown, Rio Tinto was able to make its balance sheet look better and raise more than $5.5 billion from U.S. investors unaware of problems with the assets, the SEC said.
Rio Tinto eventually sold the assets in late 2014, for just $50 million.
Lawyers for the defendants had no immediate comment or did not immediately respond to requests for comment. The SEC did not immediately respond to a similar request.
In court papers, the defendants had argued that the SEC did not establish fraud and was "plainly wrong" to conclude they needed to take a big writedown sooner, given the complexities of the accounting procedures and valuation assessments.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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