Cases & Investigations
Petróleo Brasileiro S.A. (Petrobras) Securities Litigation

On December 8, 2014, Wolf Popper LLP filed a class action lawsuit against Petróleo Brasileiro S.A. - Petrobras (“Petrobras,” NYSE: PBR), in the U.S. District Court for the Southern District of New York. Petrobras is Brazil’s publicly owned energy giant.
 
Wolf Popper’s Complaint against Petrobras alleged that that Petrobras violated Section 10(b) of the Securities Exchange Act and SEC Rule 10b-05 by making materially false and misleading statements and failing to disclose a culture of corruption at Petrobras that consisted of a multi-billion dollar money-laundering, kickback, and bribery scheme embedded in Petrobras since 2006. The scheme was uncovered through Operation Lava Jato, or Operation Car Wash, a massive anti-corruption investigation in Brazil.
 
Wolf Popper’s Complaint alleged, among other things, that Petrobras overstated its property, plant and equipment line item on its balance sheet because overstated amounts paid on contracts were carried as assets on the balance sheet.  These amounts were overstated because Petrobras inflated the value of Petrobras’s construction contracts through, among other things, approving inflated construction costs due to the bribery and kickback scheme.
 
Through a series of revelations including the arrests of members of Petrobras’s senior management and the admission by Petrobras that it may have to adjust its historical financial statements to recognize the overpricing of construction contracts, the price of Petrobras American Depository Receipts (“ADRs”) declined significantly.
 
Wolf Popper’s Complaint against Petrobras was the first Complaint filed arising out of these facts. After Wolf Popper filed the initial complaint, Universities Superannuation Scheme Limited (“USSL”), the principal pension scheme for universities and Higher Education institutions in the United Kingdom, was appointed lead plaintiff to prosecute the case and represent damaged investors.  USSL’s counsel was also appointed lead counsel in the litigation. 
 
The Petrobras securities class action ultimately settled for $3 billion for investors who purchased Petrobras securities on a U.S. stock exchange.  The settlement was approved in June 2018 by Judge Jed Rakoff of the Southern District of New York, and  the 2nd Circuit Court of Appeals affirmed the settlement at the end of August 2019.
 
In recognition of Wolf Popper’s role in investigating and bringing the first case, and the fact that its theory was adopted by subsequent counsel, Judge Rakoff granted Wolf Popper an award of attorneys’ fees and expenses, even though Wolf Popper was not a lead counsel in the litigation. Such awards are not common in securities class action litigations.