Own Rio Tinto (ASX:RIO) shares? Here's why the miner has been hit with a $750,000 fine

What's going on with Rio Tinto?

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Key points

  • Rio Tinto shares edge 0.40% lower to $126.06 
  • The Federal Court handed down a $750,000 fine to Rio Tinto for a breach of continuous disclosure 
  • The company confirmed the settlement along with ASIC's court costs 

The Rio Tinto Limited (ASX: RIO) share price is hovering in negative territory today following a $750,000 penalty notice. This comes as the verdict from the Federal Court case was handed down to the mining giant for breaching its continuous disclosure obligations.

At the time of writing, the mining giant's shares are swapping hands for $126.06, down 0.40%.

Rio Tinto agrees to Federal Court result

Investors are sending the Rio Tinto share price lower during Monday afternoon following the decision to penalise Rio Tinto.

According to the Australian Securities and Investments Commission (ASIC) media release, the Federal Court found that Rio Tinto failed to disclose material information to the ASX between 21 December 2012 and 17 January 2013.

This relates to the mining assets held by Rio Tinto Coal Mozambique which overstated its coal reserves.

ASIC deputy chair, Sarah Court commented:

Rio Tinto had obligations to the market to keep it adequately informed about its mining projects overseas.

When Rio Tinto was aware of information that Rio Tinto Coal Mozambique was no longer economically viable as a long-life, large-scale, Tier 1 coking coal resource, the market should have been properly informed in a timely manner.

Rio Tinto agreed to resolve the settlement along with ASIC's costs of the proceeding. The company filed joint penalty submissions.

Furthermore, ASIC's claims against two former Rio Tinto officers, Mr Albanese and Mr Elliott, have been dismissed. Each of the parties will bear their own legal costs.

At the time, the maximum penalty for a single breach of continuous disclosure laws was $1 million. This has since been increased.

Rio Tinto share price summary

Despite today's slight loss, it has been a solid year to date performance for Rio Tinto shares, gaining 25%.

Based on today's price, Rio Tinto has a market capitalisation of $46.79 billion and approximately 371.22 million shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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