Petrobras: Understanding the importance of monitoring both U.S. and Non-U.S. class actions

Petrobras, a Brazilian state-run energy company, is embroiled in the largest corruption scandal in Brazilian history.  An investigation dubbed “Operation Car Wash” by local Brazilian law enforcement authorities alleges that former Petrobras executives falsely inflated the value of construction projects for their own profit and paid kickbacks to politicians.  Numerous Petrobras executives, politicians, and contractors have been arrested and jailed, while the revelations of this scandal have caused significant declines in Petrobras’s securities prices and massive investor losses.

Currently, there are multiple settlement recovery efforts underway:

U.S. Securities Class Action ($3 billion)

  • Individual actions read our blog to learn more.
    • At $3 billion cash, the Petrobras scandal is the fifth largest securities class action settlement in U.S. history against non-U.S. issuers. Institutional investors pursued claims for losses in American Depository Receipts (ADRs) traded on the U.S. exchange.
    • ~100 institutional funds opted out of the class and many privately settled in 2016 and 2017

Non-U.S. Efforts

  • Dutch Foundations – read our case spotlight to learn more.
    • A Foundation called the Stichting Petrobras Compensation Foundation (SPCF) has been established in the Netherlands with the goal of obtaining recoveries for investors in securities not covered by the U.S. class action, namely outside the definitions of Covered Securities and Covered Transactions in the U.S. settlement.
  • Arbitrations in Brazil – read the Berkeley Law article to learn more.
    • Petrobras’ company bylaws require common and preferred shareholders to arbitrate securities claims in Brazil.
  • Criminal proceedings in Spain – read the International Securities Associations and Foundations press release to learn more. 
    • A coalition of investor associations and international law firms have formed a Madrid-based shareholder association, called the Asociacion de Afectados de Petrobras, to file a criminal complaint against Petrobras and others in the Spanish court.

The U.S. class action settlement illustrates the importance – after Morrison – of having systems in place for monitoring both U.S. and non-U.S. claim recovery efforts.

IMPORTANT DATES AND DEADLINES

U.S. Securities Class Action ($3 billion)

  • April 27, 2018: Opt-Out Deadline – deadline for submitting Requests for Exclusion
  • June 9, 2018: Claims Filing Deadline – deadline for submitting Claim Forms

NEXT STEPS

FRT Claims Filing Clients will need to (a) identify all of their Petrobras investments, and then (b) determine which are covered by the U.S. class action settlement or by recovery efforts outside the U.S. including (a) Dutch Foundation, (b) arbitrations in Brazil, or (c) Spanish criminal litigation.

Please contact your FRT account representative or email us at learnmore@frtservices.com for more information on this case and how FRT can help.

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About FRT

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Founded in 2008, Financial Recovery Technologies (FRT) is a leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability and transparency available. For more information, go to www.frtservices.com.

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and does not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.

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