Case 1:14-cv-09662-JSR Document 342 Filed 11/30/15 Page 1 of 223 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 FOURTH AMENDED CLASS ACTION COMPLAINT Case 1:14-cv-09662-JSR Document 342 Filed 11/30/15 Page 2 of 223 TABLE OF CONTENTS I. PRELIMINARY STATEMENT ........................................................................................ 1 II. NATUREOF THE ACTION ............................................................................................. 7 III. JURISDICTION AND VENUE ......................................................................................... 9 IV. OVERVIEW OF THE EXCHANGE ACT VIOLATIONS ............................................. 10 A. The Exchange Act Parties ..................................................................................... 10 1. Lead Plaintiff .................................................................................................. 10 2. The Company .................................................................................................. 10 3. The Individual Defendants ............................................................................. 11 4. PricewaterhouseCoopers Auditores Independentes ........................................ 14 V. FACTS RELEVANT TO EXCHANGE ACT CLAIMS.................................................. 15 A. The Skewed Bidding Process ................................................................................ 15 B. Bribery Schemes ................................................................................................... 24 C. The Refineries Scams ........................................................................................... 31 D. Additional Allegations of Scienter Concerning The Individual Defendants ........ 38 E. The Scheme Rendered the Company’s Financial Statements Materially False and Misleading............................................................................................................. 54 F. The Patently Inadequate Write-Off—From “Operation Car Wash” To Whitewash ............................................................................................................................... 58 G. PwC’s Purposeful Blind Eye to the Fraud ............................................................ 67 VI. OVERVIEW OF CLAIMS AGAINST THE EXCHANGE ACT DEFENDANTS ........ 78 VII DEFENDANTS’ FALSE AND MISLEADING STATEMENTS ................................... 84 A. False and Misleading Statements Made in 2010................................................... 84 B. False and Misleading Statements Made in 2011................................................... 89 C. False and Misleading Statements Made in 2012................................................... 93 D. False and Misleading Statements Made in 2013................................................. 100 E. False and Misleading Statements Made in 2014................................................. 109 F. False and Misleading Statements Made in 2015................................................. 119 G. Reasons Why Statements Made in 2010-2015 Were False and Misleading ...... 121 VIII. ADDITIONAL ALLEGATIONS RELATED TO THE SCHEME ............................... 125 IX. RELIANCE: FRAUD ON THE MARKET DOCTRINE .............................................. 160 X. LOSSCAUSATION ....................................................................................................... 162 XI. INAPPLICABILITY OF STATUTORY SAFE HARBOR ........................................... 163 i Case 1:14-cv-09662-JSR Document 342 Filed 11/30/15 Page 3 of 223 XII CLAIMS FOR RELIEF UNDER THE EXCHANGE ACT........................................... 163 COUNTI ........................................................................................................................ 163 For Violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) Against the ExchangeAct Defendants ............................................................................................... 163 COUNTII ....................................................................................................................... 164 For Violations of Section 20(a) of the Exchange Act Against the Individual Defendants ......................................................................................................................................... 164 XIII. CLAIMS FOR RELIEF UNDER THE SECURITIES ACT .......................................... 165 A. Introduction.........................................................................................................165 B. Background.........................................................................................................167 C. Relevant Securities Offerings ............................................................................. 171 1. May 15, 2013 Note Offerings ....................................................................... 171 2. March 10, 2014 Note Offerings .................................................................... 172 D. Securities Act Plaintiffs ...................................................................................... 176 E. Securities Act Defendants ................................................................................... 183 1. Issuer Defendants .......................................................................................... 183 2. Officer Defendants ........................................................................................ 185 3. Director Defendants ...................................................................................... 185 4. Underwriter Defendants ................................................................................ 186 5. Auditor Defendant ........................................................................................ 188 6. Relevant Non-Defendant Individuals ........................................................... 189 F. Jurisdiction and Venue ........................................................................................ 190 G. False and Misleading Statements ........................................................................ 191 1. 2011 20-F ...................................................................................................... 191 2. 8/10/12 6-K ................................................................................................... 192 3. 2012 20-F ...................................................................................................... 193 4. 4/30/13 6-K ................................................................................................... 194 5. 2/26/14 6-K ................................................................................................... 195 6. 3/7/14 6-K ..................................................................................................... 196 7. 3/11/14 6-K ................................................................................................... 196 H. Petrobras’ Financial Statements Failed to Comply With PCAOB Standards And SECRegulations ................................................................................................. 197 COUNTIII ...................................................................................................................... 209 ii Case 1:14-cv-09662-JSR Document 342 Filed 11/30/15 Page 4 of 223 For Violations of Section 11 of the Securities Act Against the Securities Act Defendants ......................................................................................................................................... 209 COUNTIV...................................................................................................................... 212 For Violations Of Section 12(a)(2) of the Securities Act Against Petrobras and PGF ... 212 COUNTV ....................................................................................................................... 214 For Violations of Section 15 of the Securities Act Against the Officer Defendants ...... 214 COUNTVI...................................................................................................................... 215 For Violations of Section 15 of the Securities Act Against Petrobras America Inc. ...... 215 XIV CLASS ALLEGATIONS FOR EXCHANGE ACT AND SECURITIES ACT COUNTS ......................................................................................................................................... 216 XV. PRAYER FOR RELIEF ................................................................................................. 218 XVI JURYDEMAND ............................................................................................................ 218 iii Case 1:14-cv-09662-JSR Document 342 Filed 11/30/15 Page 5 of 223 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