The U.K.’s Financial Conduct Authority also said Tuesday it had reached a settlement with Rio Tinto under which the company would pay a fine of £27 million ($35.6 million) to settle claims that it breached accounting rules in connection with the Mozambique assets.

In a lawsuit filed in U.S. federal court in Manhattan, the SEC said Rio Tinto, former Chief Executive Officer Thomas Albanese, and former Chief Financial Officer Guy Elliott failed to follow accounting standards and company policies to accurately value and record the assets.

The securities regulator said Rio Tinto concealed the problems with the deal, in part because Rio Tinto had already disclosed huge losses in connection with its 2007 acquisition of Alcan
The lawsuit centers on Rio Tinto’s 2011 acquisition of Mozambique coal explorer Riversdale Mining for $3.7 billion. The SEC said that soon after the deal was completed, Rio Tinto learned that the acquisition would yield less coal, and of a lower quantity, than expected.

The securities regulator said Rio Tinto concealed the problems with the deal, in part because Rio Tinto had already disclosed huge losses in connection with its 2007 acquisition of Alcan. Making public a second failure “would call into question Albanese’s and Elliott’s ability to pursue the core of Rio Tinto’s business model,” the SEC said in its complaint.

By making misleading public statements, Rio Tinto and the executives were able to raise $5.5 billion from U.S. investors, the SEC said. They continued to solicit the investments even after executives of the Mozambique subsidiary told Albanese and Elliott that the unit was likely worth negative $680 million, according to the SEC.

The SEC said the fraud continued until January 2013, when another executive discovered accounting irregularities. Albanese subsequently resigned, and the Mozambique subsidiary was sold for just $50 million, the SEC said.

Rio Tinto said it would defend itself vigorously against the allegations. Lawyers for Albanese and Elliott could not immediately be reached for comment.