I’m doing a case study for my environment class at uni on Rio Tinto’s operations in Mozambique. I’m reading an article with a timeline and in mentions that RT raised $USD 2.5 billion and $3 billion on different occasions through debt securities registered with the SEC.
I’m not fiscally minded at all so I’m struggling to grasp it. Did the SEC lend them $2.5 billion or buy their debt or something?
The SEC ended up raising legal action against them.
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Very broadly speaking, any time a company wants to raise money from the general public, it has to register with the SEC. The SEC is a regulatory body (Security Exchange Commission) that is in charge of setting standards for any securities (investments) within the US. The most commonly understood security are shares.
A company can borrow privately eg go to a bank, in which case it does not have to register that loan with the SEC. But if a company wants to issue bonds (ie borrow from the general public) it needs to register with the SEC. This means following certain regulations which come with criminal penalties.
The SEC itself doesn’t lend money, it oversees the process.
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