NEW YORK (January 3, 2018) – Labaton Sucharow LLP, which serves as counsel for bond purchasers with Securities Act claims, announced today a $2.95 billion settlement with Brazilian multinational energy corporation, Petróleo Brasileiro S.A. (Petrobras, or the defendants) in a high-profile securities class action alleging the company concealed a sprawling, decades-long kickback scheme from investors—a scandal that has ensnared not only Petrobras' former executives but also Brazilian politicians. According to the plaintiffs, the defendants’ fraudulent scheme involved billions of dollars in kickbacks, tens of billions of dollars in overstated assets, and significant losses to Petrobras investors.
The plaintiffs allege that, throughout the class period, the defendants made materially false and misleading statements regarding the company's business, operational, and compliance policies. Specifically, the defendants made false and/or misleading statements and/or failed to disclose that: (1) the company overstated its property, plant, and equipment on its balance sheet by overpricing contracts to certain companies relating to its refineries and operations and accepted kickbacks from construction companies approved for those contracts; (2) the company received multibillion dollar bribes from third-party contractors to secure contracts from Petrobras; (3) the company violated of its own Code of Ethics, as its employees and executives routinely accepted bribes from certain construction companies; (4) the company's internal controls over financial reporting were ineffective and deficient; and (5) as a result of the foregoing, Petrobras' public statements were materially false and misleading at all relevant times.
Partner Thomas A. Dubbs remarked, “This is an excellent result for the class and reflects the continuing power of the ‘33 Act to obtain compensation for investors in public offerings.” Dubbs, along with partner Lou Gottlieb, led the Labaton Sucharow team in this matter.
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 and serves as counsel for the bond purchasers.