The U.S. Securities and Exchange Commission (SEC) has dropped a long-running enforcement case against a former executive at mining giant Rio Tinto, alleging that he violated federal securities laws by fraudulently inflating the value of assets acquired by the company.
In 2017, the SEC charged Rio Tinto’s former CFO, Guy Elliott, along with the former CEO and the company itself, alleging that they engaged in fraud by concealing the true value of certain coal assets after initially acquiring them for US$3.7 billion — but ultimately selling them for just US$50 million a few years later after plans to mine and ship that coal ran into trouble.
Today, the SEC and Elliott filed a joint stipulation to dismiss the commission’s civil enforcement action against him, with prejudice.
“The commission’s decision to exercise its discretion and dismiss the pending enforcement action is based on the specific facts and circumstances of this case and, as stated in the joint stipulation, “does not necessarily reflect the commission’s position on any other case,” the regulator said.
In 2017, the SEC alleged that the company and the executives failed to follow accounting standards and company policy for valuing the assets, which resulted in the release of misleading financial statements ahead of the company raising US$5.5-billion from investors through a series of U.S. bond offerings in 2012.
The regulator initially sought permanent injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties against the defendants, along with officer and director bans against the executives.
The SEC settled the case against the company, and former CEO Thomas Albanese, in 2023.
Without admitting or denying the regulator’s allegations, the company agreed to pay a US$28-million civil penalty, and to retain an independent consultant to review and evaluate its compliance with accounting standards. Albanese consented to a civil penalty of US$50,000, also without admitting or denying the allegations.