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IN RE: Petrobras Securities Litigation 14-CV-09662-Consolidated

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Case 1:14-cv-09662-JSR Document 191 Filed 07/16/15 Page 1 of 173 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Case No. 14-cv-9662 (JSR) IN RE: PETROBRAS SECURITIES LITIGATION DEMAND FOR JURY TRIAL CONSOLIDATED SECOND AMENDED CLASS ACTION COMPLAINT Case 1:14-cv-09662-JSR Document 191 Filed 07/16/15 Page 2 of 173 TABLE OF CONTENTS I. PRELIMINARY STATEMENT ........................................................................................ 1 II. NATUREOF THE ACTION ............................................................................................. 6 III. JURISDICTION AND VENUE ......................................................................................... 8 IV. OVERVIEW OF THE EXCHANGE ACT VIOLATIONS ............................................... 9 A. The Exchange Act Parties ....................................................................................... 9 1. Lead Plaintiff .................................................................................................... 9 2. The Company .................................................................................................. 10 3. The Individual Defendants ............................................................................. 11 4. PricewaterhouseCoopers Auditores Independentes ........................................ 13 V. FACTS RELEVANT TO EXCHANGE ACT CLAIMS.................................................. 14 A. The Skewed Bidding Process ................................................................................ 14 B. Bribery Schemes ................................................................................................... 18 C. The Refineries Scams ........................................................................................... 24 D. The Individual Defendants Were Alerted to the Rampant Fraud at Petrobras ..... 31 E. The Scheme Rendered the Company’s Financial Statements Materially False and Misleading............................................................................................................. 38 F. PwC’s Purposeful Blind Eye to the Fraud ............................................................ 42 VI. OVERVIEW OF CLAIMS AGAINST THE EXCHANGE ACT DEFENDANTS ........ 52 VII DEFENDANTS’ FALSE AND MISLEADING STATEMENTS ................................... 59 A. False and Misleading Statements Made in 2010................................................... 59 B. False and Misleading Statements Made in 2011................................................... 64 C. False and Misleading Statements Made in 2012................................................... 67 D. False and Misleading Statements Made in 2013................................................... 72 E. False and Misleading Statements Made in 2014................................................... 81 F. Reasons Why Statements Made in 2010-2014 Were False and Misleading ........ 89 VIII. ADDITIONAL ALLEGATIONS RELATED TO THE SCHEME ................................. 92 IX. RELIANCE: FRAUD ON THE MARKET DOCTRINE .............................................. 113 X. LOSSCAUSATION ....................................................................................................... 115 XI. INAPPLICABILITY OF STATUTORY SAFE HARBOR ........................................... 115 XII. CLAIMS FOR RELIEF UNDER THE EXCHANGE ACT........................................... 116 COUNTI ........................................................................................................................ 116 i Case 1:14-cv-09662-JSR Document 191 Filed 07/16/15 Page 3 of 173 For Violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) Against the ExchangeAct Defendants ............................................................................................... 116 COUNTII ....................................................................................................................... 117 For Violations of Section 20(a) of the Exchange Act Against the Individual Defendants Gabrielli, Foster and Barbassa ........................................................................................ 117 XIII. CLAIMS FOR RELIEF UNDER THE SECURITIES ACT .......................................... 118 A. Introduction.........................................................................................................118 B. Background.........................................................................................................119 C. Relevant Securities Offerings ............................................................................. 124 1. May 15, 2013 Note Offerings ....................................................................... 124 2. March 10, 2014 Note Offerings .................................................................... 125 D. Securities Act Plaintiffs ...................................................................................... 126 E. Securities Act Defendants ................................................................................... 127 1. Issuer Defendants .......................................................................................... 127 2. Officer Defendants ........................................................................................ 128 3. Director Defendants ...................................................................................... 129 4. Underwriter Defendants ................................................................................ 130 5. Auditor Defendant ........................................................................................ 132 6. Relevant Non-Defendant Individuals ........................................................... 132 F. Jurisdiction and Venue ........................................................................................ 134 G. False and Misleading Statements ........................................................................ 134 1. 2011 20-F ...................................................................................................... 134 2. 8/10/12 6-K ................................................................................................... 136 3. 2012 20-F ...................................................................................................... 137 4. 4/30/13 6-K ................................................................................................... 138 5. 2/26/14 6-K ................................................................................................... 139 6. 3/7/14 6-K ..................................................................................................... 139 7. 3/11/14 6-K ................................................................................................... 140 H. Petrobras’ Financial Statements Failed to Comply With PCAOB Standards And SECRegulations ................................................................................................. 141 COUNTIII ...................................................................................................................... 153 For Violations of Section 11 of the Securities Act Against the Securities Act Defendants ......................................................................................................................................... 153 COUNTIV...................................................................................................................... 156 ii Case 1:14-cv-09662-JSR Document 191 Filed 07/16/15 Page 4 of 173 For Violations Of Section 12(a)(2) of the Securities Act Against Petrobras and PGF ... 156 COUNTV ....................................................................................................................... 158 For Violations of Section 15 of the Securities Act Against the Officer Defendants ...... 158 XIV. CLASS ALLEGATIONS FOR EXCHANGE ACT AND SECURITIES ACT COUNTS ......................................................................................................................................... 159 XV. PRAYER FOR RELIEF ................................................................................................. 161 XVI. JURY DEMAND ............................................................................................................ 162 iii Case 1:14-cv-09662-JSR Document 191 Filed 07/16/15 Page 5 of 173 Lead Plaintiff Universities Superannuation Scheme Limited (“USS” or “Plaintiff”), by and through its undersigned counsel, alleges the following individually and on behalf of a class of all persons and entities similarly situated. All allegations are made upon information and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff’s allegations are based upon the investigation of Plaintiff’s counsel, which included a review of U.S. Securities and Exchange Commission (“SEC”) filings by Petroleo Brasileiro S.A. — Petrobras (“Petrobras” or the “Company”) and its wholly-owned subsidiaries Petrobras International Finance Company S.A. (“PifCo”) and Petrobras Global Finance B.V. (“PGF”), as well as regulatory filings and reports, securities analysts’ reports and advisories about the Company, press releases and other public statements issued by the Company, media reports about the Company, and other publicly available information concerning Petrobras and (as defined herein), the Individual Defendants, the Officer and Director Defendants, the Underwriter Defendants, and Petrobras’ outside accountants.
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