In the civil complaint filed in the U.S. District Court for the Southern District of New York, the SEC alleged that Rio Tinto committed fraud by not accurately disclosing the value of RTCM and not impairing it when Rio Tinto published its 2011 year-end accounts in February 2012 or its interim results in August 2012.
Rio Tinto said it believes that the SEC case is unwarranted and that, when all the facts are considered by the court, the SEC’s claims will be rejected.
Separately, Rio Tinto has reached a settlement with the United Kingdom’s Financial Conduct Authority (FCA) in relation to the timing of the impairment of RTCM. The FCA determined that Rio Tinto should have carried out an impairment review in relation to RTCM for its 2012 interim results and, if it had done so, those results published in August 2012 would have reflected the impairment it recorded six months later. The FCA determined that Rio Tinto breached the FCA’s Disclosure and Transparency Rules and imposed a financial penalty on Rio Tinto of £27,385,400 ($36.4 million). The size of the fine is calculated by reference to the company’s market capitalization.
The FCA made no findings of fraud, or of any systemic or widespread failure by Rio Tinto. The case is now closed. The Australian Securities and Investments Commission is also reviewing the RTCM impairment.
RTCM was acquired in 2011 and divested in 2014.