SEC Sues Vale for False Claims Tied to Brumadinho Dam Collapse

Matt Robinson, Bloomberg News

Residents survey damage after a Vale SA dam burst in Brumadinho, Minas Gerais state, Brazil, on Saturday, Jan. 26, 2019. A Brazilian judge has blocked 1 billion reais ($265 million) from Vale SA while environmental authorities imposed a $66 million fine on the miner after a tailings dam it owns burst on Friday in the second deadly accident in the same mining region in just over three years. , Bloomberg

(Bloomberg) -- U.S. securities regulators sued Vale SA, one of the world’s largest iron ore miners, for allegedly making false claims about safety before the January 2019 collapse of its Brumadinho dam that killed 270 people.

Rio de Janeiro-based Vale misled local governments, communities, and investors through its environmental, social, and governance disclosures, starting in 2016, the U.S. Securities and Exchange Commission said in a statement on Thursday. Vale, which has shares that trade on the New York Stock Exchange as well as in Brazil, falsely told investors that the company adhered to the “strictest international practices” despite knowing that the Brumadinho dam didn’t meet international standards, according to the regulator.

“While allegedly concealing the environmental and economic risks posed by its dam, Vale misled investors and raised more than $1 billion in our debt markets while its securities actively traded on the NYSE,” Melissa Hodgman, associate director of the SEC’s enforcement division, said in the statement.

The SEC’s complaint, filed in federal court in Brooklyn, is seeking civil penalties, ill-gotten gains plus interest. According to the regulator, in addition to “immeasurable environmental and social harm” caused by the collapse, the incident helped shrink Vale’s market capitalization by $4 billion.

Vale alluded to the SEC’s case in a recent filing with the regulator. The company said that the Wall Street watchdog and Brazilian securities regulators had both been investigating the firm’s disclosures.