The Securities and Exchange Commission charged Rio Tinto (NYSE: RIO) executives with fraud on Oct 18, 2017, presumably for pumping the value of coal reserves from its Mozambique coal property, which was acquired in 2011 for $3.7 billion and then sold several years later for $50 billion.
So far, the company has been mute and in turn investors have sold RIO shares down from a high of $51.26 reached on Oct 16th to a low of $47.34 reached in pre-market trading the day after SEC charges were levied against the company and two executives.
The former CEO (Thomas Albanese) and CFO (Guy Elliott) were named in the complaint in a filing made in Federal Court in Manhattan, Wednesday.
“Instead, as the project began to suffer one setback after another resulting in the rapid decline of the value of the coal assets, they sought to hide or delay disclosure of the nature and extent of the adverse developments from Rio Tinto’s board of directors, audit committee, independent auditors, and investors,” the SEC said.
The SEC claims that the two executives concealed what the regulator called ‘setbacks’ in its financial disclosures, which in turn allowed RIO to resell the coal property for a staggering profit of nearly $46 billion.
Financials Trend readers should expect a flurry of lawsuits against both the two former key executives and the company. Rio Tinto’s silence in the face of the SEC’s charges is unusual for such a large global mining company and further down turns in RIO shares are likely as a result.
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