At a Glance

  • The U.S. Securities and Exchange Commission on Friday asked a U.S. district court to drop its pending charges against Guy R. Elliott, former chief financial officer of Anglo-Australian mining company Rio Tinto Ltd, in a fraud case that spanned eight years of litigation, according to a related announcement.
  • The civil enforcement action, first filed in 2017, accused Elliott and other named defendants of failing to follow proper accounting principles and inflating the value of coal assets previously acquired by the London- and Melbourne-based mining company. Before the joint stipulation was filed, the U.S. District Court for the Southern District of New York had denied Elliott's motion for summary judgment last February, with Judge Analisa Torres noting that "genuine issues of material fact remain" regarding whether Elliott "acted unreasonably" and on two remaining claims that he violated the Exchange Act.
  • The joint stipulation filed Friday requests that the court dismiss the charges against Elliott with prejudice, with each party bearing its own costs. In the litigation announcement, the SEC cited its authority to exercise prosecutorial discretion in the case and noted that its decision "is based on the specific facts and circumstances of this matter and, as stated in the joint stipulation, 'does not necessarily reflect the Commission's position on any other case.'"

Deep Dive

Lawyers from Paul, Weiss, representing Elliott, said in a Friday statement that the joint dismissal stipulation is a "complete vindication of our client."

"Mr. Elliott denied these allegations from the start and, after eight years of SEC litigation, has now been fully exonerated," a spokesperson for Elliott said in an emailed statement to CFO Dive. "The SEC's dismissal ends this matter, with regulators in the U.S., U.K., and Australia all having found no fault and made no adverse findings against Elliott."

The SEC declined to comment beyond its public filings.

The joint stipulation brings a quiet end to an eight-year court battle between the SEC and a former corporate executive. Elliott, who served as the international mining company's top financial officer for 11 years before stepping down in 2013, was the last defendant to continue litigating. According to his LinkedIn profile, Elliott currently serves as chair of the Prudence Trust, a mental health services research organization, and as chairman and chief investment officer of the Venice in Peril Fund.

The SEC charged Rio Tinto, Elliott, and its former CEO Thomas Albanese with fraud in 2017 for concealing the "rapid and dramatic deterioration" in the value of the Mozambique African coal business it acquired for $3.7 billion in April 2011, according to its complaint.

The business, which operated as Rio Tinto Coal Mozambique (RTCM), was the second-largest acquisition under Albanese, who served as top executive from 2007 to 2013. The business quickly ran into trouble, with RTCM executives informing Elliott and Albanese that by May 2012 its valuation was "negative $680 million under the best-case configuration," the complaint said. However, the named executives concealed and misled the company's board, audit committee, and independent auditors until the misconduct was identified, and Rio Tinto ultimately sold RTCM for $50 million in 2014.

The SEC sought permanent injunctions, disgorgement of ill-gotten gains, and bars against Albanese and Elliott serving as officers or directors of public companies, along with civil penalties against each party. The regulator settled with Rio Tinto and Albanese in 2023, requiring Rio Tinto to pay a $28 million penalty and Albanese to pay a $50,000 penalty. Albanese and the company neither admitted nor denied the allegations, according to court documents.

The end of the eight-year case comes as the U.S. Department of Justice turns its attention to the central bank — prosecutors issued subpoenas to the Federal Reserve involving Chairman Jerome Powell's June testimony regarding the agency's $2.5 billion headquarters renovation project.

In a video statement posted on the Federal Reserve's website, Powell criticized the DOJ's action as part of a continuing effort to undermine the central bank's historical independence, with Donald Trump repeatedly urging the Fed to cut interest rates at a faster pace.

"This is about whether the Fed can continue to set interest rates based on evidence and economic conditions — or whether monetary policy will be subject to political pressure or intimidation," Powell said.