A securities class action was recently filed to represent certain investors in Petroleo Brasileiro S.A.
The Rio de Janeiro, Brazil-based company, known as Petrobras, is a semi-public global energy firm. The organization's operations span both the production and distribution of oil, gas, biofuels and other alternative energy sources.
The lawsuit, announced by Labaton Sucharow LLP on Dec. 24, 2014, was brought forth to represent those who purchased or otherwise came to own the securities of Petroleo Brasileiro S.A., including debt securities that were originally sold by Petrobras Global Finance B.V. and Petrobras International Finance Company S.A., between Jan. 22, 2010, and Nov. 21, 2014. These dates are inclusive, and represent the class period.
The lawsuit was filed in the U.S. District Court for the Southern District of New York.
The shareholders represented included individuals or entities that bought these financial instruments either through the New York Stock Exchange or elsewhere, as well as persons or organizations that acquired the aforementioned debt securities pursuant and or traceable to three registered public offerings the semi-public global energy firm held on or around Feb. 3, 2012, May 15, 2013 and finally March 11, 2014.
Other legal challenges
Labaton Sucharow LLP filed this lawsuit to represent Petrobras investors at a time when the company has been dealing with other legal challenges, according to Reuters. On Dec. 24, the law firm brought forth a separate legal claim to represent the city of Providence, Rhode Island.
In addition, a separate law firm – Wolf Popper LLP – filed a lawsuit against Petrobras earlier this month on the behalf of those who bought the company's American Depositary Receipts between May 20, 2010, and Nov. 21, 2014. According to this legal claim, the company breached Section 10(b) of the Securities Exchange Act.
Securities class action allegations
The lawsuit brought forth by Labaton Sucharow LLP alleged that Petrobras, PGF, PifCo as well as some of their directors and officers breached U.S. Securities and Exchange Commission Rule 10b-5, as well as Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
According to the securities class action, defendants failed to reveal important information, and made false and misleading statements about the company's internal controls, asset values, expenses and net income.
The lawsuit specifically claimed that Petrobras was involved in a long-term bribery scheme whereby company executives and other individuals received billions, while the company concealed these payments in inflated asset values capitalized on the company's balance sheet. By improperly concealing this activity, as well as its impacts, defendants caused the securities issued by Petrobras, PGF and PifCo to trade at artificially inflated prices.
Allegations related to offerings of debt-based instruments
The securities class action made further allegations related to the offering of bonds, according to Reuters. These claims revolve around bond documents, and the material misstatements they allegedly contained.
More specifically, the lawsuit alleged that when filing offering documents with the SEC related to the issuance of $26.5 billion in PGF and PifCo notes between February 2012, May 2013 and March 2014, certain defendants failed to disclose material adverse information, and made statements that were false and misleading.
As a result of these alleged actions, the suit claimed that Petrobras, PGF and PifCo, some of the underwriters of the aforementioned offerings and also specific officers and directors of the aforementioned companies breached Sections 11, 15 and 12(a)(2) of the Securities Act of 1933.
The securities class action alleged that through various disclosures, the company's participation in the bribery scheme, its insufficient internal controls and the false and misleading claims the firm made about its net income, asset values and expenses were revealed.
When markets responded to this news, company securities fell in value, the lawsuit claimed. The prices of common and preferred ADSs plunged 80.92 and 78.01 percent, respectively, from the highs they reached during the class period.
What investors can do
Labaton Sucharow announced that entities or individuals who bought or otherwise acquired the securities of Petrobras, PGF or PifCo during the aforementioned class period are class members. Eligible investors that fit this description have the option to apply for lead plaintiff status, which means they are a court-appointed representative for absent members of the class.
The law firm specifically stated that those interested in serving in this capacity have until Feb. 6, 2015, to file lead plaintiff motions papers with the U.S. District Court for the Southern District of New York. However, eligible investors can share in any recovery acquired even if they decide to remain absent members.
If eligible investors have any questions about the securities class action, they can contact Rachel Avan, Esquire, of Labaton Sucharow.