Class action against Petrobras moves ahead

A lawsuit initiated in June against Brazilian oil and gas company Petrobras was given class certification by the Southern District Court of New York on Tuesday. 

Eight separate lawsuits were launched in the summer against Petrobras and its subsidiary PGF as well as PriceWaterhousCoopers Auditores Independentes (the auditor that the lawsuit claims turned “a purposeful blind eye” to the corruption) and 15 former Petrobras executives. 

The Manhattan court announced it would review the legality of a class action suit at the start of the summer. This latest announcement gives the go-ahead for the UK's Universities Superannuation Scheme (USS), Union Asset Management Holding, the Employee's Retirement System of the State of Hawaii and five others to pursue their case.

Judge Jed Rakoff issued the certification to all investors who acquired Petrobras securities between 22 January 2010 and 28 July 2015, according to a USS statement. Also certified was a class of investors who acquired debt securities issued by Petrobras or Petrobras International Finance Company through public offerings on 15 May 2013 and 11 March 2014.

The Liverpool-based defined-benefit pension scheme said in its statement that it believes the class including purchasers of securities through IPO should be extended to 28 July 2015 “as it calls into question the accuracy of Petrobras' reported $2.5 billion impairment charge related to the fraudulent bribery scheme and illegal contract overpayments”.

In his decision, Rakoff said that “In effect, Petrobras is arguing (rather remarkably) that its own estimate of $2.5 billion in losses was so outlandishly incorrect that the market and investors in securities should have known better than to rely on it.”

Law firm Pomerantz was approved as class action counsel as part of Rakoff's ruling.