U.S. regulator sues Vale for ‘false and misleading’ claims ahead of dam tragedy in 2019  

The U.S. Securities and Exchange Commission (SEC) has charged Vale S.A. (NYSE: VALE) with making “false and misleading claims” about the safety of its dams ahead of the January 2019 collapse of its Brumadinho dam in Brazil, which killed 270 people, in a complaint filed in the U.S. District Court in New York, the SEC said.  

According to the SEC’s complaint, the mining giant “manipulated multiple dam safety audits; obtained numerous fraudulent stability certificates; and regularly misled local governments, communities and investors” about the safety of the dam, since 2016.  

Furthermore, the complaint alleges that Vale knew “for years” that the dam, which was built to contain potentially toxic byproducts from mining operations, did not meet the internationally recognized standards for dam safety. But Vale’s public sustainability reports and other public filings assured investors that the company adhered to the strictest international practices, the SEC said.  

One of the world’s largest iron ore producers, Vale, denied the SEC’s allegations, including the ones that claimed that its disclosures violated the U.S. law and said that it would “vigorously defend this case.”  

“The company reiterates the commitment it made right after the rupture of the dam, and which has guided it since then, to the remediation and compensation of the damages caused by the event,” Vale said in a press release.   

The SEC’s filing notes that the dam’s collapse caused “immeasurable environmental and social harm,” and led to a loss of more than US$4 billion in Vale’s market capitalization. 

“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. “By allegedly manipulating those disclosures, Vale… undermined investors’ ability to evaluate the risks posed by Vale’s securities.”  

According to Melissa Hodgma, the Associate Director of SEC’s Division of Enforcement, Vale misled investors and raised more than $1 billion while its securities actively traded on the NYSE. “Today’s filing shows that we will aggressively protect our markets from wrongdoers, no matter where they are in the world.”  

The SEC’s complaint charges Vale with violating antifraud and reporting provisions of the federal securities laws and seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.   

At mid-day in Toronto, Vale’s shares were trading at $16.81 per share within a 52-week trading range of $11.16 and $23.17. The company has 4.7 billion common shares outstanding for a market cap of $79.8 billion.