Vale S.A., one of the world’s largest iron ore producers and a publicly traded Brazilian mining company, has agreed to pay $55.9 million to settle charges brought by the Securities and Exchange Commission (SEC) regarding allegedly false and misleading disclosures about the safety of its dams. The charges stem from the January 2019 collapse of the Brumadinho dam, which killed 270 people.
False and Misleading Disclosures
The SEC’s complaint alleged that Vale’s public sustainability reports assured investors that all of its dams were certified as stable, even though the Brumadinho dam did not meet internationally recognized safety standards for years. The complaint highlights the interplay between the company’s sustainability reports and its obligations under federal securities laws.
SEC’s Comment
Mark Cave, Associate Director of the SEC’s Division of Enforcement, stated, “Our action against Vale illustrates the interplay between the company’s sustainability reports and its obligations under the federal securities laws.” The SEC’s settlement with Vale shows that public companies can be held accountable for material misrepresentations in their ESG-related disclosures, just as they would for any other material misrepresentations.
Terms of the Settlement
The settlement requires Vale to pay a civil penalty of $25 million and disgorgement and pre-judgment interest of $30.9 million. Additionally, Vale would permanently restrain and enjoin from violations of the Securities Act of 1933 and of the Securities Exchange Act of 1934. The settlement is still subject to the U.S. District Court approval for the Eastern District of New York.
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