The U.S. Securities and Exchange Commission (SEC) filed a complaint on April 28 in the U.S. District Court for the Eastern District of New York against Vale S.A., alleging Vale misled investors through false and misleading Environmental, Social, and Governance (ESG) disclosures.
In its complaint, the SEC alleges that since 2016, Vale, a Brazilian mining company, made misleading claims about the safety of its dams and operations prior to the January 2019 collapse of Vale’s Brumadinho dam. The collapse killed 270 people and caused a loss of over $4 billion in Vale’s market capitalization.
In its 76-page complaint, the SEC alleges that “while taking full of advantage of the capital markets in the United States, Vale committed securities fraud by intentionally concealing the risks that one of its older and more dangerous dams, the Brumadinho dam, might collapse.” The SEC alleges that Vale improperly obtained stability declarations for the dam by knowingly using unreliable laboratory data; concealed material information from its dam safety auditors; disregarded accepted best practices and minimum safety standards; removed auditors and firms who threatened Vale’s ability to obtain dam stability declarations; and made false and misleading statements to investors.
“Many investors rely on ESG disclosures like those contained in Vale’s annual Sustainability Reports and other public filings to make informed investment decisions,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement in a press release. “By allegedly manipulating those disclosures, Vale compounded the social and environmental harm caused by the Brumadinho dam’s tragic collapse and undermined investors’ ability to evaluate the risks posed by Vale’s securities.”
According to the SEC complaint, Vale’s concealment of the true condition of the Brumadinho and other tailings dams caused Vale’s sustainability reports, periodic filings, and other Environmental, Social, and Governance disclosures to be materially false and misleading. Through its myriad of false statements, material omissions, and other deceptive acts or practices, Vale violated the antifraud provisions of the federal securities laws.
SEC Complaint: Securities and Exchange Commission v Vale S.A., Case No. 22-cv-2405, E.D. N.Y District Court.