In re Petrobras Securities Litigation
Status: Ongoing Case
Stemming from the largest corporate scandal in Brazilian history
Labaton Sucharow serves as counsel for bond purchasers in this high-profile securities class action against Brazilian multinational energy corporation, Petróleo Brasileiro S.A. (Petrobras).
Garnering international attention in Reuters, Forbes, and Agence France-Presse, the action arises from the largest corporate scandal in Brazilian history—an egregious bribery and kickback scheme thought to have siphoned off as much as $30 billion from the company over 15 years. Brazilian federal investigators discovered that Petrobras awarded lucrative contracts based in part on improper payments made to influential individuals associated with the company. Petrobras then reimbursed entities that made these bribes through inflated contract payments. As a result, Petrobras reported artificially inflated asset values and false and misleading expense and net income figures during the class period.
The arrest of a former Petrobras executive in March 2014 started a string of disclosures, exposing the true state of Petrobras' asset values and the extent of the bribery scheme. On November 26 and 27, 2014, reports revealed that the company's auditors would not approve financial statements until the conclusion of an internal investigation, which recommended penalties for certain employees. Significant declines in the market values of Petrobras' common and preferred stock American Depositary Shares (ADSs) and outstanding notes followed these disclosures.
With class counsel, Labaton Sucharow successfully defeated three motions to dismiss the complaint by the company and its auditor. We also played an important role in convincing the district court to grant the plaintiffs’ motion for class certification. The defendants have appealed the class certification ruling to the Second Circuit Court of Appeals, and the plaintiffs expect a decision in the first half of 2017.
The case is In re Petrobras Securities Litigation, No. 14-cv-9662 (S.D.N.Y.). The plaintiffs are Universities Superannuation Scheme Limited, Union Asset Management Holding AG, North Carolina Department of State Treasurer, and Employees Retirement System of the State of Hawaii. Labaton Sucharow represents Employees Retirement System of the State of Hawaii. The defendant is Petróleo Brasileiro S.A.