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.