Pomerantz LLP (“Pomerantz”) and Lead Plaintiff Universities Superannuation Scheme, Ltd. have reached a $50 million settlement with Petrobras’ auditors, PricewaterhouseCoopers Auditores Independentes (“PwC Brazil”). With this additional settlement, Pomerantz’s recovery on behalf of Petrobras investors now reaches $3 billion. This settlement represents the largest securities class action settlement in a decade. It is also the largest settlement ever in a class action involving a foreign issuer and it is the fifth largest class action settlement ever achieved in the United States. It is also the largest settlement ever achieved by a foreign lead plaintiff. Moreover, it is the largest class action settlement in history not involving a restatement of financial reports.
The settlement was achieved after nearly three years of hard-fought litigation, including U.S. and foreign discovery and complex motion practice in the Southern District of New York, an appeal at the United States Court of Appeals for the Second Circuit, and during the pendency of a petition by defendants for a writ of certiorari to the United States Supreme Court.
Jeremy Lieberman, Co-Managing Partner of Pomerantz, commented on the Settlement:
“We are very pleased with the $50 million settlement achieved with PwC Brazil. With allegations of such an extended and pervasive fraud at Petrobras, it is particularly important to look at the role of auditors and other gatekeepers to ensure that a blind eye is not turned to corporate malfeasance. The settlement announced today ensures accountability for those gatekeepers whose duty it is to protect the interests of shareholders, not their corporate clients.”
The litigation involved one of the largest securities class actions pending in the United States, in which Brazil’s energy giant, Petrobras, was accused of concealing a sprawling, decades-long kickback scheme from investors. The scandal ensnared not only Petrobras' former executives but also Brazilian politicians, including former presidents and at least one-third of the Brazilian Congress. According to plaintiffs, defendants’ fraudulent scheme involved billions of dollars in kickbacks, tens of billions of dollars in overstated assets, as well as significant losses to Petrobras investors. Plaintiffs asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933.
Pomerantz Co-Managing Partner, Jeremy A. Lieberman led the litigation assisted by Partners, Marc I. Gross, Jennifer Pafiti, and Emma Gilmore; Of Counsel, John A. Kehoe and Brenda Szydlo; and Associates Jennifer Sobers, Adam Kurtz and Justin Nematzadeh.