- Company Name
- Vale S.A.
- Stock Symbol
- Class Period
- April 13, 2018 to January 28, 2019
- Motion Deadline
- March 29, 2019
- Eastern District of New York
The complaint charges Vale and certain of its officers with violations of the Securities Exchange Act of 1934. Vale is a mining and metals company headquartered in Rio De Janeiro, Brazil, that produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally.
In November 2015, the Fundão tailings dam, joint owned by Vale and BHP Billiton, burst, releasing tailings downstream and flooding communities. The dam failure resulted in 19 fatalities and negatively impacted property and the environment. Vale purportedly took steps after the dam failure to prevent such a catastrophe from recurring in the future.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Vale’s business and operations. Specifically, contrary to Vale’s statements throughout the Class Period that it was committed to keeping its workplace safe and minimizing environmental damage after the Fundão tailings dam failure, defendants failed to disclose that Vale’s programs to mitigate health and safety incidents were inadequate and that they had failed to adequately assess the risk and damage potential of a dam breach at Vale’s Feijão iron mine, which led to several people being killed and hundreds more reported missing after the Feijão mine was breached. As a result of this information being withheld from the market, the prices of Vale securities were artificially inflated, reaching highs of close to $16 per share during the Class Period.
On January 25, 2019, Reuters reported that Vale’s tailings dam at the Feijão iron mine had failed, sending a “torrent of sludge . . . through the mine’s offices, including the cafeteria during lunchtime.” Several people were killed and rescuers were searching for hundreds of others who were missing. Vale’s share price fell 8% on this news. On January 26, 2019, BBC News reported that hundreds of people affected by the dam’s breach remained missing, in part because the dam’s alarm system failed at the time of the accident. A report in a Brazilian newspaper stated that “the risk of collapse of the dam had been mentioned in a ‘tense meeting’ that approved its license last month.” Later the same day, Reuters reported that Brazil’s National Mining Agency ordered Vale to suspend operations at the dam and that state prosecutors were seeking $1.3 billion from Vale’s accounts for handling damages and that prosecutors expected to freeze more funds in the future. Separately it was reported that Brazil’s environmental agency had fined Vale $66.32 million for various violations relating to the Feijão iron mine.
Then on January 28, 2019, Reuters reported that “Brazil’s top prosecutor said Monday she will pursue criminal prosecutions after the collapse of a tailings dam operated by mining giant Vale SA killed at least 58 people and left hundreds missing, and that executives may be punished.” The same day, Reuters reported that Brazil’s securities industry regulator had opened a probe into Vale’s filing related to the failed dam. On this news, the price of Vale shares fell 18% to close at $11.20 per share. By February 1, 2019, the death toll had risen to 115 people confirmed dead and another 248 missing, making the Feijão dam failure potentially the deadliest mine disaster in Brazil’s history.