European Class Action Likely for Petrobras

A group of international investors and law firms are seeking compensation from Brazil's state-led oil company Petrobras under European law for losses allegedly suffered as the result of a giant price-fixing, bribery and political kickback scandal.

Netherlands-based Stichting Petrobras Compensation Foundation (SPCF) has informed Petrobras of its interest in negotiating a settlement, the group said in a statement released on Wednesday.

If Petrobras refuses talks or declines to respond, the SPCF plans to file a class-action suit against the Rio de Janeiro-based company in a Dutch court in Rotterdam, the statement said.

When the fraud and bribery schemes "orchestrated by the company's administration and employees were finally uncovered in 2014, investors lost billions of dollars, euros and reais resulting in significant declines in the value of assets and breakneck drops in the price of Petrobras shares," SPCF said.

Petrobras did not immediately respond to a request for comment.

SPCF believes it has a claim against Petrobras under European securities law because the company's shares are traded through Spain's Latibex on the Madrid Stock Exchange. Trades are cleared through Spain's Iberclear.

As a result, SPCF says, Petrobras is subject to the rules of Comisión Nacional del Mercado de Valores (CNMV), Spain's stock regulator. When Petrobras sold securities in Europe it also made it clear that it would be subject to Europe-wide securities rules under European Securities and Markets Authority, the foundation added.

Investors in the United States have already filed suit in a New York federal court claiming that Petrobras' U.S.-traded shares make the company subject to U.S. securities law. However, the judge in the case has limited potential redress to those who bought Petrobras securities registered in the United States.

The SPCF is seeking redress not only for losses on Petrobras stock on the Latibex but for those who lost money on Brazil's BM&FBovespa Exchange in Sao Paulo and for owners of Euro-denominated bonds.

"The foundation provides a vehicle to litigate on behalf of Petrobras investors and/or to establish a binding settlement that, together with the U.S. class action provides for a truly global settlement," the SPCF said.

Lemstra Van der Korst N.V., a Dutch litigation and class action law firm, is cooperating with securities litigation firms Withers LLP, Motley Rice and Lowey Dannenberg Cohen & Hart to organize the legal action.