petrobrasIn an interesting opinion addressing several of the critical issues in the U.S. securities lawsuit arising out of Petrobras bribery scandal, on July 30, 2015, Southern District of New York Judge Jed Rakoff denied in part and grated in part the defendants’ motions to dismiss. Among other things, Judge Rakoff rejected the company’s “adverse interest” argument, in which the company had tried to argue that the complicit corporate executives’ knowledge of the bribery scheme and consequent awareness of the misrepresentations of the company’s financial condition could not be attributed to the company. However, Judge Rakoff dismissed the claims asserted under Brazilian law on behalf of shareholders who purchased their Petrobras shares on the Bovespa, the São Paulo Stock exchange, ruling that these shareholders’ claims were subject to the mandatory arbitration clause in the company’s bylaws. A copy of Judge Rakoff’s opinion can be found here.
Continue Reading Petrobras Securities Suit: Judge Rakoff Rejects Company’s “Adverse Interest” Argument; Rules Brazilian Investors Must Arbitrate Brazilian Securities Law Claims

brazilIn an earlier post, I noted that a significant factor driving securities litigation filings so far this year has been the rising number of U.S. securities lawsuits involving non-U.S. companies. A number of different factors are contributing to the filing of these suits, but among the factors is the increasing numbers of U.S.-listed non-U.S. companies that have been caught up in corruption investigations in their home countries.

The highest profile company among the firms involved in corruption probes is the Brazilian petroleum company, Petrobras, which has been the target of growing Operação Lava Jato (Operation Car Wash) corruption investigation in Brazil. Petrobras, whose ADSs trade on the NYSE, was hit with a class action securities lawsuit in the U.S. in December 2014 (as discussed here).

The continuing Petrobras investigation has spread to a number of other Brazilian companies. Among other things, the investigation has led to the recent arrests of two high profile executives in the construction industry in Brazil, as discussed here. The leaders of the nation’s two largest engineering and construction companies, Marcelo Odebrecht, head of Odebrecht SA, and Otavio Marques Azevedo, head of Andrade Gutierrez, were taken into custody in raids linked to the Petrobras scandal.

The investigation has now led to yet another U.S. securities class action lawsuit against yet another Brazilian company. On July 1, 2015, a plaintiff shareholder filed a securities class action lawsuit in the Southern District of New York against Braskem, S.A. and certain of its directors and officers. Braskem, which is based in Brazil, is Latin America’s largest petrochemical company.
Continue Reading Another U.S. Securities Suit Arising from Overseas Corruption Investigation

2015-06-18 13.22.54aThe D&O Diary was on assignment in São Paulo last week, for meetings and for a little bit of a look around. I had never before been to Brazil, or for that matter, to South America. São Paulo turned out to be a bit of a revelation. For one thing, São Paulo, the financial capital

latinamericaAmong the features of the U.S. legal system that foreign observers often single out for concern is the availability of class action litigation procedures. The fact is, however, that many countries around the world have adopted some form of class action procedure, at least for consumer-oriented litigation. According to a recent report, Latin America is