Securities class action lawsuit filed against Petroleo Brasileiro S.A.

A securities class action lawsuit was filed against Petroleo Brasileiro S.A.

Petroleo Brasileiro S.A. is a semi-public global energy firm. It is based in Rio de Janeiro, Brazil.

On Dec. 8, 2014, Wolf Popper LLP announced it had filed a legal claim against the company, representing all persons who obtained American Depositary Shares of Petrobras through a U.S. exchange between May 20, 2010, and Nov. 21, 2014.

The securities class action lawsuit, which was brought forth in the U.S. District Court for the Southern District of New York, involved allegations the company made materially false and misleading statements. The legal action claimed that Section 10(b) of the Securities Exchange Act was breached.

Rosen Law Firm suit
A separate lawsuit, brought forth by The Rosen Law Firm on Dec. 9, 2014, made similar claims, alleging the company provided investors with information that was materially false and misleading.

This legal claim, which was filed in an attempt to recover losses by purchasers of company securities between the same class period of May 20, 2010, and Nov. 21, 2014, alleged that Petrobas carried items on its balance sheet that were overstated amounts paid on contracts, and that as a result, the energy firm overstated the line item on its balance sheet for plant, property and equipment.

In addition, the lawsuit brought forth by The Rosen Law Firm claimed that the company did not reveal the significant wrongdoing taking place at Petrobas, which included a money-laundering bribery scheme that involved billions of dollars.

These problems came out into the open, as the company admitted that in order to recognize the overpricing of construction contracts, the energy firm might need to adjust its historical financial statements. In addition, certain members of senior management were arrested.

Amid this situation, ADSs of the company fell from $19.38 at the close of business on Sept. 5, 2014, to a closing price of $10.50 each on Nov. 24, 2014. As a result, each of these securities lost $8.88, or 46 percent of their value.

What investors can do
Now that the legal claims have been filed, the law firms that brought them forth have provided guidance on what eligible investors can do to apply for the position of lead plaintiff. For both of the aforementioned securities class action lawsuits, eligible investors have until Feb. 6, 2015, to move the court.

Further, The Rosen Law Firm notified investors that no class had yet been certified for the lawsuit it had brought forth. Until the lawsuit obtains this status, eligible investors do not have representation from counsel unless they obtain this representation themselves.