The U.S. securities regulator has dismissed an application from mining giant Rio Tinto and two former company leaders to have serious fraud charges tossed out of court.
Only days after the company, along with former chief executive Tom Albanese and former chief financial officer Guy Elliott filed their defence with the U.S. District Court in Manhattan, the Securities and Exchange Commission (SEC) said it would push ahead with the prosecution.
The charges originally laid by the SEC in October last year relate to allegations of an attempt to cover up multi-billion losses on a coal investment in Africa.
In a court filing cited by the Reuters news agency, the SEC said its complaint adequately alleged that fraud occurred, and the company and its executives intended to deceive investors.
"This is not simply a case about Rio Tinto's valuation of Rio Tinto Coal Mozambique," the SEC it quoted by Reuters as saying in one the filings.
"Rio Tinto, Albanese, and Elliott faced enormous pressure to structure a successful deal in light of the fact that they were responsible for an earlier disastrous multibillion dollar acquisition," the SEC said.
Rio Tinto paid $3.7 billion the mine in Mozambique in 2011 and was forced to write-off more than $3 billion in value less than two year later.
The deal would ultimately cost Mr Albanese his job in 2013.
The SEC action centres on allegations that Rio Tinto tried to hide, or delay disclosure of the mounting losses in Mozambique.
In the most recent filing, the SEC dismissed the company's assertion the write-down was immaterial as it accounted for only around 3 per cent of total assets at the time.
The regulator argued in its filing the write-down was material as it would have slashed first-half earnings in 2012 by more than 50 per cent if it had been properly stated in the results.
While the SEC move is not surprising it is another setback for Rio Tinto and the former executives who have vowed to "vigoursly" defend the case.
However, U.S. District Judge Analisa Torres is yet to rule on the defence motion to dismiss the SEC action and timetable on the decision is yet to be set down.
With Reuters
