A U.S. judge turned down Rio Tinto's request to dismiss a 2017 case filed by the U.S. SEC accusing the company of inflating the value of its coal investment in Mozambique, Bloomberg News reported March 18.
The SEC accused former CEO Thomas Albanese and former CFO Guy Elliott of inflating the value of coal assets acquired in Mozambique for US$3.7 billion, which were sold a few years later for US$50 million.
The lawyers for the company, Albanese and Elliott were looking to dismiss the SEC's lawsuit, saying the U.S. regulator failed to plead that Rio Tinto intended to commit fraud or made false disclosures related to the assets' value.
The judge narrowed some of the claims but said the SEC's assertion that the defendants knew about the issues is reasonable.
"The SEC has plausibly alleged that Rio Tinto was not just facing risks and challenges, but that it was apparent, at least to the individual defendants, that Rio Tinto had no realistic options to transport large amounts of coal," U.S. District Judge Analisa Torres said.
The company said it intends to "vigorously defend" the charges, and it expects that "the remaining SEC allegations will be rejected once all the facts are considered in court."
The Australian Securities and Investments Commission also started legal proceedings against Rio Tinto and the executives, claiming the diversified miner knew that its coal resource estimate for its then-Mozambique asset was "materially" overstated within months of completing the deal.