## Facts

- Rio Tinto acquired Riversdale Mining Limited in 2011 for about $3.7 billion, including a Mozambique coal project.
- Rio Tinto’s internal assessments allegedly showed the project’s economics deteriorated due to lower coal quality and major rail/port constraints and costs, producing internal valuations reflecting negative value.
- The SEC alleged Rio Tinto and two senior executives continued reporting the asset at roughly $3 billion in public filings and investor communications, without timely impairment or disclosure of the impairment’s extent.
- Rio Tinto later announced a multi-billion-dollar impairment of the Mozambique coal assets.
- The SEC sued alleging, among other claims, scheme liability under Exchange Act § 10(b) and Rule 10b-5(a), (c), and Securities Act § 17(a)(1), (3).
- The district court dismissed the scheme-liability claims, concluding the allegations were misstatements and omissions only.
- After the Supreme Court’s decision in Lorenzo v. SEC, the SEC sought reconsideration; the district court declined and certified an interlocutory appeal on scheme liability.

## Issues

1. Whether, after Lorenzo v. SEC, misstatements and omissions “without more” can support scheme liability under Rule 10b-5(a) and (c) and Securities Act § 17(a)(1) and (3).
2. Whether Lorenzo abrogated the Second Circuit’s rule that scheme liability requires deceptive conduct beyond misstatements and omissions.

## Decision

- The Second Circuit affirmed dismissal of the SEC’s scheme-liability claims.
- Lentell remained controlling: misstatements and omissions alone cannot support scheme liability under Rule 10b-5(a), (c) or Securities Act § 17(a)(1), (3).
- Lorenzo was read to permit scheme liability where the defendant engages in additional deceptive conduct (such as dissemination of false statements), even if not the “maker” under Rule 10b-5(b).
- The SEC’s allegations—overvaluation, failure to impair timely, and signing or approving filings—did not plead additional deceptive acts beyond the alleged misstatements and omissions.

## Legal Principles

- Rule 10b-5(b) targets making untrue statements or material omissions; subsections (a) and (c) target deceptive devices, acts, practices, or courses of business.
- Scheme liability under Rule 10b-5(a) and (c) (and parallel provisions in Securities Act § 17(a)(1) and (3)) requires conduct beyond misstatements and omissions, though statements may be part of a broader scheme.
- Lorenzo does not convert ordinary misstatement/omission allegations into scheme claims; it applies where a defendant’s conduct (e.g., dissemination with scienter) constitutes a deceptive act distinct from merely making or failing to correct statements.
- Maintaining the “something beyond” requirement avoids using scheme provisions to bypass limits on who “makes” a statement for purposes of Rule 10b-5(b).

## Conclusion

The Second Circuit held that scheme-liability provisions do not reach misstatements and omissions standing alone; absent additional deceptive conduct such as dissemination, the SEC could not proceed under Rule 10b-5(a) and (c) or Securities Act § 17(a)(1) and (3), and Lorenzo did not alter that rule in the circuit.


Securities & Exch. Comm'n v. Rio Tinto PLC, 41 F.4th 47 (2d Cir. 2022)