Hagens Berman filed a securities class action against Rio Tinto (NYSE: RIO) and certain former senior executives alleging that they publicly overstated the value of Rio Tinto Coal Mozambique (“RTCM”) by billions of dollars. The complaint alleges that Rio Tinto, its former Chief Executive Officer (Thomas Albanese), and its former Chief Financial Officer (Guy Robert Elliott), were fully aware that RTCM’s business was essentially worthless but they nevertheless continued to fraudulently tout its value in the billions of dollars.
In August 2012, an executive in charge of Rio Tinto’s Technology & Innovation (“T&I”) division informed Elliott that RTCM was worth between negative $4.9 billion to $300 million, but Elliott did not inform Rio Tinto’s board or its investors during meetings with them, and both Albanese and Elliot continued to knowingly present the false valuation to investors, the board, and the public. The T&I executive finally brought RTCM’s enormous overvaluation directly to the attention of Rio Tinto’s board of directors and, on January 15, 2013, the board determined that an 80 percent write-down of RTCM’s value to $611 million should be recorded.
The Company reported this write down in its financial statements filed with the SEC on February 15, 2013. On March 15, 2013, the full impact of the impairment was disclosed to investors in the Rio Tinto’s audited financial statements for its fiscal year ending December 31, 2012.
Both CEO Albanese and CFO Elliott departed from their positions shortly after the board’s decision. Rio Tinto ultimately sold RTCM for a mere $50 million after recording an additional $470 million RTCM writedown.
PROCEDURAL HISTORY AND CASE STATUS
On October 23, 2017, Hagens Berman filed this action against Rio Tinto, its former CEO Thomas Albanese and its former CFO Guy Elliot. On May 18, 2018, following the parties May 1st 2018 Stipulation and Order, the Court issued an Order appointing Anton Colbert as Lead Plaintiff, and approving Hagens Berman as Lead Counsel.
The parties exchanged two sets of pre-motion correspondence pursuant to Judge Analisa Torres’s individual Practices, with the second set being exchanged and filed on July 19 and 26, 2018.
On September 25, 2018, on behalf of Lead Plaintiff Anton Colbert and the Class, Hagens Berman filed the First Amended Complaint in this action, alleging additional facts, including allegations stemming from the UK’s Financial Conduct Authority’s findings and financial penalties levied against Rio Tinto, additional allegations from the SEC, as well as additional false and misleading statements made during the Class Period.