"Shareholder litigation puts a spotlight on environmental risk", 12 Jul 2016

Rule 10b of the Securities Exchange Act gives shareholders the right to bring a lawsuit to recover economic loss sustained as a result of fraud related to the trading of their investments in stocks or bonds. This fraud can come in many forms, including insider trading, price fixing or corporate misrepresentations to its investors. This last type of fraud has seen increased attention (primarily at the state level) from those who want to see corporate statements regarding future environmental liabilities, including climate change impacts.

In the past year, lawsuits against three different foreign-owned mining companies operating in South America were brought in U.S. courts regarding mismanagement and lack of disclosure of environmental risk.

The Canadian mining company Barrick Gold announced in May that it had reached a preliminary agreement to pay $140 million to settle claims brought by shareholders regarding its failure to comply with environmental regulations at its mining operation on the Chile-Argentina border. And both Vale and BHP Billiton are on the receiving end of multiple shareholder lawsuits stemming from the tragic collapse of a tailings dam operated by its Brazilian joint venture, Samarco....