Regulatory Updates – Insider – April 20, 2023

Ashley Howe Inside ACMA

SEC Task Force Announces first ESG Settlement over Dam Collapse

On March 28, 2023, the U.S. Securities and Exchange Commission (SEC) announced a $55 million settlement with Vale S.A., a Brazilian mining company listed on the New York Stock Exchange. This task force is part of the Administration’s response to climate and environmental issues.

The SEC filed charges in April of 2022 alleging “false and misleading disclosures about the safety of its dams prior to the January 2019 collapse of the Brumadinho dam that killed 270 people,” according to an SEC press release.   

The SEC alleged that Vale made false disclosures about the safety of the dam to deceive authorities and investors. Notably, the allegedly false statements occurred in the company’s disclosures related to environmental, social, and governance (ESG) matters contained in sustainability reports, periodic filings, and other disclosures. Under the settlement, which remains subject to court approval, Vale agreed to pay $55.9 million to settle the charges. 

According to the SEC’s April 2022 complaint, Vale committed securities fraud by intentionally concealing risks that its Brumadinho dam might collapse.  

The SEC’s Climate and ESG Enforcement Task Force is empowered “to proactively identify ESG-related misconduct consistent with increased investor reliance on climate and ESG-related disclosure and investment.”  

For more information on the ESG task force, click here.