The Mineral Resources Ltd (ASX: MIN) share price has been volatile in 2024 and is down nearly 45% this year.
Shares have slipped nearly 28% in the past month alone, with investor confidence shaken by revelations into co-founder Chris Ellison's tax history.
Now, corporate watchdog, the Australian Securities and Investments Commission (ASIC), has escalated its inquiries into Ellison's potential misconduct involving tax evasion and governance issues.
The news isn't price-sensitive, so Mineral Resources shares are largely unaffected today. But there's no telling what long-term implications this may have.
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Mineral Resources shares in the headlines again
Mineral Resources shares have been under the pump after news of Ellison's conduct began to circle the headlines.
News reports initially focused on Ellison's involvement in a tax evasion scheme involving companies registered in the British Virgin Islands. These companies were reportedly used to buy and sell mining equipment. However, investigations uncovered more findings into the co-founder's conduct.
These included Ellison using company resources for personal benefit and directing employees to manage personal matters.
Mineral Resources, or "MinRes", as it's known in investor circles, also completed an internal investigation into the matter, which resulted in Ellison agreeing to gradually step away from the company.
ASIC has now teamed up with the Australian Taxation Office (ATO) to examine the details and uncover any breaches of corporate laws.
There's even a Senate hearing into the matter. According to The Australian, ASIC Deputy Chair Sarah Court confirmed to the hearing the body's intention to scrutinise any misconduct by Ellison or the company.
Board and governance questions loom
Mineral Resources' board is feeling the heat over governance standards.
Following the internal investigation, Ellison agreed to a phased exit over 12-18 months, with board-imposed penalties of $8.8 million and forfeited remuneration of nearly $10 million. Ouch.
Despite these measures, scrutiny around the board's handling of Ellison's actions persists, with investors questioning the long-term impact on the company's credibility and performance.
The Australian Future Fund, which holds a nearly $90 million stake in Mineral Resources shares, recently voiced concerns over governance issues.
It hinted at a potential review of its investment in the company.
In light of the turbulence, brokers are also fairly neutral on the stock. It is rated a hold by consensus, according to CommSec.
Bell Potter is one of the bullish crowd. The broker retained its buy rating on Mineral Resources shares, in a recent note.
It highlighted the company's core business strengths in mining and mining services in its appraisal.
The broker remains optimistic, with a 12-month price target of $61.50 on the mining stock.
However, it cautions that volatility could persist as the ASIC investigation unfolds. It could potentially implicate other executives or reveal further misconduct.
Time is said to heal all. But time will also tell what happens from here.
Foolish takeaway
Mineral Resources shares remain in the hot seat as ASIC now sticks the probe into the mining giant.
For investors, the question is whether to weather the storm or sit this one out. Brokers are fairly split, despite some support from the likes of Bell Potter.
In the last 12 months, the stock is down more than 35%.
