Project Description

This is an abbreviated version of Battea’s Petroleo Brasileiro securities litigation proprietary research. Full case summaries and economic analyses are available to clients through Battea’s litigation monitoring portal. For more information, or to request a demonstration, contact Battea.

Case Summary

This is a collective legal action against Petroleo Brasileiro S.A. for investors who purchased Petrobras securities in transactions outside of the United States, primarily securities issued in Brazil, the Netherlands and Spain.
Exchange/SymbolBM&F BOVESPA, PETR4; PETR3

What is this case about?

For nearly a decade, Petrobras allegedly engaged in a massive corruption scheme that went unchallenged until 2014, when, on October 27, 2014, it issued a press release stating that certain of its key executives were being investigated in connection with bribery and money laundering. Since then, prosecutors and federal police in Brazil have unearthed the country’s largest-ever corruption scandal by linking a ring of black-market money changers to a price-fixing and political kickback scheme at the state-run oil company. Sworn testimony has revealed that Petrobras executives and Brazilian government officials accepted bribes from members of a cartel of construction companies in exchange for awarding inflated contracts to members of the cartel in connection with oil refinery construction, drilling rig construction, and other energy-related construction projects. Brazilian federal police arrested the former head of Petrobras’ refining and supply department in March 2014. Since then, over 100 indictments have been issued by Brazilian authorities, and over a dozen executives linked to Petrobras have been convicted for offenses such as money laundering and racketeering. In November 2014, the SEC sent a subpoena to Petrobras requesting information about the widening corruption investigations, and the Financial Times reported that the United States Department of Justice (“DOJ”), which can bring criminal charges, opened an investigation into the company. Petrobras is expected to face the largest penalty ever levied by United States authorities, pursuant to the corruption investigation by the DOJ.

Litigation Update

On October 22, 2016, Bloomberg News reported that Petrobras settled four lawsuits brought by investors including Pacific Investment Management Co. (PIMCO Total Return Fund), Janus Overseas Fund, Dodge & Cox International Stock Fund, and Al Shams Investments.  According to a statement filed with Brazil's securities regulator, Petrobras will include a $353 million provision in its third quarter financial statements to reflect the settlements as well as ongoing negotiations with other plaintiffs.  Lemstra van der Korst, the Dutch local counsel retained by Stichting Petrobras Compensation Foundation (SPCF), has been in settlement communication with Petrobras to no avail and is currently in the final phase of filing a writ (complaint) in the Netherlands. The writ will seek declaratory relief for damaged investors, essentially asking the Court to issue a ruling that Petrobras engaged in unlawful bribery acts and financial misrepresentation, in violation of applicable laws and securities regulations.

Brief Company Profile

Petroleo Brasileiro S.A. Petrobras explores for and produces oil and natural gas.  The company refines, markets, and supplies oil products.  Petrobras operates oil tankers, distribution pipelines, marine, river and lake terminals, thermal power plaints, fertilizer plants, and petrochemical units. The company operates in South America and elsewhere around the world.

How do I Participate in this Litigation?

In close cooperation with SPCF, ISAF continues to aggregate eligible investors in preparation for the filing of the writ. A very substantial number of institutional investors have joined the coalition and support SPCF. ISAF and SPCF are working with additional large institutional investors who will commit prior to filing of the writ.   Investors can join the Foundation by signing a participation agreement.  They are also invited to sign a Foundation support letter.  The participation agreements will remain confidential.

International Securities Associations & Foundations Management Company

ISAF is a company managed by experts in the securities litigation claims industry. ISAF finances non - US litigations and hires the law firms to manage these efforts.  ISAF organizes these coalitions so that there is no up-front cost or risk to damaged investors who join the group seeking redress through the collective action litigation.  In the event of a successful outcome, ISAF collects a contingency fee which is distributed to the law firms, claims processors, claims administrators through the collective action litigation.  On 10 February 2016, ISAF announced the formation of the independent Netherlands-based Stichting Petrobras Compensation Foundation (SPCF) to pursue claims on behalf of international investors who purchased securities in Brazil and the Netherlands against Petrobras. Concurrently, ISAF announced the formation of The Asociacion de Afectados de Petrobras, a Madrid-based shareholder association established to pursue claims on behalf of investors who purchased Petrobras securities on the Bolsa Madrid LATIBEX.

Significant News Events

October 9, 2014 - The Wall Street Journal
"Ex-Petrobras Executive Says Kickbacks Were Paid to Ruling Party’s Officials."

October 10, 2014 Bloomberg News
"Judge Confirms Audio Recordings of Former Petrobras Director."

October 15, 2014 Bloomberg
"[Council for Economic Defense] to Probe Potential Cartel in Petrobras Contracts."

October 27, 2014 Bloomberg
"Petrobras Scandal Is 'Time Bomb' For Start of 2015"

December 9, 2014 Bloomberg
"Petrobras Shares Drop as Probe Widens and U.S. Investor Sues."

Share Price PerformanceCommon
October 10, 2014 Closing PriceBRL 18.87BRL 20.02
December 10, 2014 Closing PriceBRL 10.11
BRL 10.83
Share Price Decline(BRL 8.76)(BRL 9.19)
Percent Decline-46.42%-45.905

Petroleo Brasileiro S.A. Price Chart