Pomerantz Achieves Significant Milestone in Petrobras Securities Class Action - PBR

NEW YORK, Feb. 02, 2016 -- In In re Petrobras Sec. Litig., 14-cv-09662-JSR, Pomerantz achieved a significant victory on behalf of Petrobras investors when Judge Rakoff granted in all respects Lead Plaintiff Universities Superannuation Scheme’s Motion for Class Certification.  In a ruling issued today, Judge Rakoff certified a class of purchasers of Petrobras investors that purchased or otherwise acquired the Company’s securities on a U.S. exchange or through other U.S. transactions between January 22, 2010 and July 28, 2015 for claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Moreover, for claims asserted under Sections 11, 12(a)(2) of the Securities Act of 1933, the Court certified a class of all purchasers who purchased or otherwise acquired debt securities through transactions occurring in the United States issued by Petrobras, Petrobras International Finance Company S.A. (“Pifco”) on/or traceable to public offerings made by these entities on May 15, 2013 and March 11, 2014.

Significantly, the Court endorsed Pomerantz’ argument in favor of extending the class period by four months to July 28, 2015, in order to account for alleged ongoing material misstatements.  That extension calls into question the accuracy of Petrobras’ reported impairment charge related to the fraudulent bribery scheme and illegal contract overpayments.  Pomerantz successfully alleged that Petrobras’ current financial statements were likely to be materially false and misleading because the Company severely understated the amount of overpayments improperly capitalized.  According to the Complaint, on April 22, 2015, and thereafter, Petrobras misleadingly reported only $2.5 billion as write-offs of overpayments improperly capitalized.  In reality, that amount is likely to reach double-digit numbers, according to reports by the Brazilian federal police.

With respect to appointing Pomerantz as class counsel:  “On the basis not only of [ ] counsel’s prior experience but also the Court’s observation of its advocacy during the many months since it was appointed lead counsel, the Court concludes that Pomerantz, the proposed class counsel, is ‘qualified, experienced and able to conduct the litigation.’” 

Jeremy Lieberman, Lead Counsel for the Class, stated “we are very pleased with the Court’s ruling granting Lead Plaintiff’s Motion for Class Certification.  The fraud conducted by Petrobras during the Class Period has eviscerated billions of dollars in shareholder value, as well as hobbled the political and economic structure of Brazil, one of the world’s largest economies.  Today’s ruling represents a significant milestone in Plaintiffs’ efforts to recoup a significant portion of the losses incurred by Defendants’ unprecedented scheme.” 

The complaint alleges that, throughout the Class Period, defendants made materially false and misleading statements regarding the company's business, operational and compliance policies. Specifically, 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 was receiving multi-billion dollar bribes from third-party contractors to secure contracts from Petrobras; (3) the company was in violation of its own Code of Ethics, as its employees and executives were routinely accepting 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. 

The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com

CONTACT:
Robert S. Willoughby
Pomerantz LLP
[email protected]