Rio Tinto PLC (RIO) Stock Rating Lowered by Clarkson Capital


A spokeswoman for Elliott told CNNMoney that the former Rio Tinto chief financial officer "fully refutes" the allegations and "will be vigorously contesting them".

A lawsuit filed in the United States accuses Rio Tinto, its former chief executive Thomas Albanese and ex-chief financial officer Guy Elliott of failing to follow accounting standards and company policies to accurately value and record the assets.

The FCA has also slapped Rio with a fine of more than £27.4m for breaching disclosure and transparency rules, alleging its financial reporting had been "inaccurate and misleading".

Despite the modelling results, Rio Tinto decided that it would not carry out an impairment test, as required by worldwide accounting standards, to assess whether an impairment was required to be recorded in its financial reporting of its 2012 half year interim results.

"Rio Tinto raised a total of $5.5 billion in USA debt offerings that incorporated materially misleading statements and omissions concerning RTCM's valuation", the lawsuit alleges.

"The FCA made no findings of fraud, or of any systemic or widespread failure by Rio Tinto", said Rio Tinto in an announcement.

It bought the Mozambique assets in 2011 for $3.7bn (£2.8bn) and sold them a few years later for $50m. Shortly after acquiring the assets, the company discovered only a third of its maximum coal production could be transported that way with higher-cost transport alternatives being required to transport the remainder.

The regulator is seeking injunctions, a return of "allegedly ill-gotten gains plus interest", and civil penalties. He stepped down from oil giant Shell, where he was serving as non-executive director, on Wednesday.

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"Rio Tinto believes that the SEC case is unwarranted and that, when all the facts are considered by the court, or if necessary by a jury, the SEC's claims will be rejected", the firm said in a statement on Wednesday morning.

Shell said: "We sincerely hope he satisfactorily resolves those proceedings and, that in that event, he would like to be considered for rejoining the board". Axiom Securities restated a "sell" rating on shares of Rio Tinto PLC in a report on Thursday, July 13th.

The impairment was later reflected in Rio Tinto's 2012 year-end accounts published in January 2013, which knocked 80% off the initial value of the investment. This plan assumed Rio Tinto would be able to transport coal on barges from the mines down the Zambezi River to the coast for export.

Rio Tinto avoided the full GBP39.1 million fine from the FCA by agreeing to settle early in its investigations, undertaken in collaboration with the SEC and Australian Securities & Investments Commission. Finally, Canaccord Genuity lowered shares of Rio Tinto PLC from a "buy" rating to a "hold" rating in a research note on Tuesday, September 26th.

"Reflecting the size of the company, this is the largest fine imposed to date by the FCA for a breach of rules relating to a firm's official listing and demonstrates how vitally important high standards of disclosure and transparency are to ensuring our markets function fairly and effectively".

Fellow co-director Steven Peikin added in a statement: "Rio Tinto and its top executives allegedly failed to come clean about an unsuccessful deal that was made under their watch". It added that the case was now closed.

Equities researchers at Jefferies Group upped their FY2017 EPS estimates for Rio Tinto PLC in a report issued on Thursday.