In Re Petrobras Securities Litigation
Case Summary
OPERATION CAR WASH
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How a Corruption Scandal in Brazil Means Recovery to Investors in the United States
In 2014, the Federal Police Force of Brazil began investigating black market dealers, known in Brazil as doleiros, who used small businesses like gas stations and car washes for laundering profits. “Operação Lava Jato”(Operation Car Wash) was supposed to be routine, yet very quickly it became not merely the biggest corruption scandal in the history of Brazil, but perhaps the biggest corruption scandal in world history. Within a few years, Operation Car Wash would shake the Brazilian political system to its core.
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The first sign that the police had stumbled onto something bigger than the usual laundering job was when the doleiros said they were working for Petrobras executive Paulo Roberto Costa. Under questioning, Costa explained the quid pro quo: he and other Petrobras executives had been overpaying contracts in return for a cut of secret slush funds; contractors had formed a cartel to decide who among them would have the next turn in overcharging Petrobras. By some estimates, firms overcharged Petrobras—and therefore the Brazilian people as well as investors worldwide—by as much as $5 billion.
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Petróleo Brasileiro S.A., aka Petrobras, is a multinational oil and gas company that is mostly owned by the Brazilian government. At its peak, it was the sixth biggest company in the world, based on market cap. As Operation Carwash unfolded, Petrobras lost over $250 billion. The company’s American Depository Receipts (ADRs) fell from $50 in late 2009 to just over $10 by December 2014.
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Dozens of companies and hundreds of leading politicians, business leaders, and Petrobras executives were implicated, with nearly 200 people indicted. Over $3 billion in overpayments were recovered before the Brazilian Federal Police shut down the investigation this summer—which is a scandal in itself.
On December 31, 2017, Petrobras and investors in the US settled a securities class action for $2.95 billion. This is the biggest securities settlement in over a decade, the fifth biggest in history, and the largest US settlement ever against a foreign entity. Settlement notices and proof of claim forms should be available soon.
Chicago Clearing is tracking this settlement closely and has posted all settlement documents to the client reporting site. If you would like to speak more to us about this case, please give us a call today.
Settlement notices, claim forms, and the stipulation of settlement were posted to the docket on March 15, 2018.
Case Details
The claim filing deadline for this settlement is:
June 9, 2018
The settlement fund for this case is:
$3 billion
The class period for this case is:
January 22, 2010 to July 28, 2015
The class identifiers for this case are:
ADRs & certain debt securities. For a full list of CUSIPs, please see CCC's securities monitoring portal.
The claims administrator for this case will likely be Garden City Group.
The lead plaintiff for this case is:
Universities Superannuation Scheme, Ltd
The lead counsel for this case is:
Pomerantz LLP
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