Vale S.A. Securities Class Action

USDC – Eastern District of New York

Class Period: october 27, 2016 – February 6, 2019

Attorneys:

Frederic S. Fox

FFox@kaplanfox.com

Donald R. Hall

DHall@kaplanfox.com

Jeffrey P. Campisi

JCampisi@kaplanfox.com

Melinda D. Campbell

MCampbell@kaplanfox.com

Aaron L. Schwartz

ASchwartz@kaplanfox.com

Documents:

• Complaint

Kaplan Fox Successfully Defeats Defendants’ Attempt to Decertify the Class in In re Vale Securities Litigation

On Tuesday, March 10, 2026, Judge Eric Komitee denied defendants’ motion to decertify the class of investors led by Colleges of the Applied Arts and Technology (“CAAT”) in a securities fraud lawsuit against Vale S.A. and some of its former executives. The suit charges the Brazilian mining company with misleading investors about the safety of its dams and rigor of its dam risk management program prior to the catastrophic collapse of a dam that unleashed a torrent of mud, killing 270 people and devastating the local environment.

The investor class was certified in March 2022 and the Second Circuit denied defendants’ petition for leave to appeal later that year. But in 2023, Vale presented a new expert analysis with a motion to decertify, arguing that the market for its securities was inefficient during the class period, and therefore the presumption of class-wide reliance under Basic Inc. v. Levinson, 485 U.S. 224 (1988) did not apply. Their expert, Dr. Sumon Mazumdar, performed a market efficiency study which purportedly demonstrated inefficiency under one prong of the eight-factor test used to evaluate market efficiency. He did not challenge the other seven factors except to argue that they are insufficient in the face of an empirical study supposedly contradicting them.

In opposition to defendants’ motion, CAAT submitted the expert testimony of Dr. David Tabak, who identified numerous flaws and errors in Dr. Mazumdar’s study, and conducted his own market efficiency study using an objective measure to identify relevant news days for the study. Additionally, CAAT argued that Second Circuit caselaw clearly provides that the seven undisputed factors are a sufficient basis in and of themselves to justify class certification.

Judge Komitee agreed with CAAT. He rejected defendants’ expert’s study, finding that the inclusion of immaterial news “biases his event study because he treats days with events not expected to shift the market one way or another as days on which such a price impact should have been observed.” He further found that “Dr. Tabak’s is the better of the two methodologies,” but upheld class certification based solely on the “persuasive ‘indirect’ evidence of market efficiency” from the seven undisputed factors.

The parties are awaiting rulings on their respective motions to exclude each other’s damages experts, as well as the scheduling of motions to exclude additional experts, motions for summary judgment, and trial.

The action relates to the disclosure on January 25, 2019 that Vale’s Feijao tailings dam burst and that hundreds of people were missing; Vale stock fell over 8% the same day.  The next day, BBC News and Reuters reported the dam’s alarm system had failed, that operations at the dam had been suspended, and that Vale would be fined for various violations related to the dam.  On January 28, 2019, Reuters reported that Vale would be facing criminal prosecution and that investigations would be launched into the company; Vale stock fell 18% the same day.  On February 6, 2019, the Wall Street Journal reported that Vale had been warned by inspectors about the risk of failure at the Feijao dam; Vale stock fell more than 6% that day.  The drops in market value of Vale stock allegedly caused significant damage to class members.  

On May 15, 2019, Kaplan Fox was appointed lead counsel.  The Court’s order appointing lead counsel can be downloaded here.