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Stichting Petrobras Compensation Foundation v. Petroleo Brasileiro SA

The Class Action Case Files


Portfolio monitoring and asset recovery of growing global securities class actions can be daunting.
Broadridge can help simplify the complex.

Just the Facts

On May 26, 2021, a Dutch court allowed a group of global investors to move forward with its collective action against Petroleo Brasileiro S.A. (“Petrobras”)—a Brazilian oil company—and other defendants, for their participation in an alleged corruption and bribery scheme which came to light in 2014. This decision comes three years after the historical $3B Petrobras settlement out of the US, which predominately excluded individuals and entities who did not purchase Petrobras securities on the New York Stock Exchange, or the US debt markets.

“The court ruling in the Netherlands presents an opportunity for global investors to seek relief for their harm outside of US courts.”

Initially filed in January 2017, the collective investor action is being brought by Stichting Petrobras Compensation Foundation (“the Foundation”), on behalf of investors who purchased Petrobras securities and debt instruments outside of the US or on non-US exchanges. The class includes all parties who purchased Petrobras securities on the Brasil Bolsa Balcão S.A. (B3 – Brazil), and Petrobras bonds linked to the EU markets from January 1, 2004, to July 28, 2015. Initially submitted to the district court in Rotterdam seeking declaratory relief, this litigation could ultimately lead to a collective settlement under the Dutch Collective Settlement Act (“WCAM”) for the benefit of eligible investors that have previously opted-in to the litigation.

In Dutch collective actions, aggrieved investors must first opt-in to the litigation by hiring counsel and enter into a funding agreement, thus limiting financial exposure. In this case, the Foundation is working with International Securities Associations & Foundations - Petrobras (“ISAF Petrobras”) to fund the litigation and is working with a consortium of global law firms to litigate its claims.

The Dutch court has required that the Foundation submit its arguments by September 1, 2021. Accordingly, investors who are interested should begin to make necessary arrangements to participate in this opt-in litigation.

In re Petrobras Securities Litigation (United States) Stichting Petrobras Compensation Foundation v. Petroleo Brasileiro SA (the Netherlands)
Class Definition All investors who purchased Petrobras common and preferred American Depository Receipts and other debt instruments purchased on US exchanges during the class period. All parties who purchased common or preferred shares of Petróleo Brasileiro S.A. on the BM&F Bovespa, the B3 – Brazil exchanges and/or European stock exchanges such as the LATIBEX on Bolsa, Madrid; and fixed income and debt instruments issued by Petrobras Global Finance B.V. or Petrobras International Finance Company S.A., and other Petrobras bonds linked to EU markets before July 28, 2015.
Class Period January 22, 2010 - July 28, 2015. January 1, 2004 - July 28, 2015.
Procedure Opt-out Opt-in
Equity Holders The US ADRs make up approximately 15% of the global public equity issued by Petrobras. The “Rest of The World” holds approximately 30% of the global public equity issued by Petrobras when excluding the US ADRs and the Petrobras equity held by the Brazilian government.
Status Settled, $3B USD (2018). On May 26, 2021, the District Court in Rotterdam refused to enforce Petrobras’s arbitration clause. The Foundation must submit its merits arguments by September 1, 2021. The Foundation reports that it presently represents investors with $15 billion in estimated damages, excluding bondholders.

Case Challenges

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INTERNATIONAL OPT-IN LITIGATION

The Netherlands has an opt-in litigation mechanism, this means investors who wish to participate in a Dutch action must proactively join the litigation prior to a settlement. This process can be longer and more involved, and the claimant must work with both a law firm and litigation funder.

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INTERNATIONAL EXCHANGE AND COMPLEX INSTRUMENTS

This action involves securities purchased on the Brazilian exchanges, Brasil Bolsa Balcão S.A. (B3 – Brazil) and BM&F Bovespa, as well as bonds linked to the EU markets which makes identifying eligible transactions and holdings time-consuming and complex. A higher-level review would be required to locate each transaction and confirm the transaction occurred on the correct exchange.

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DUTCH LAW AND CLAIM FILINGS

The participants in the Dutch proceedings will need to affirmatively opt-in to the litigation. Based on the Dutch collective proceeding mechanisms that will apply, this option will require more open and active participation in the litigation by the investor.

Additional Filing Costs

ADDITIONAL FILING COSTS

Participating in an opt-in litigation may involve additional costs and additional contractual relationships. Unlike a US class action, each potential claimant is treated separately, and each individual case has its own funding and paperwork requirements. Typically, there are fees associated with filing in these matters. Funding agreements and costs will differ depending on the case in which the claim is filed, and the law firm and litigation funder.

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