Class Action Suit Seeks Claimants against Brazil’s Gerdau

• 07 July 2016
• in: Personal Injury Blog

On May 26, 2016, a New York law firm filed a class action suit against Gerdau, the largest steel manufacturer in South America; the suit alleges that the company mislead investors about tax liabilities and other material business issues, causing them to lose money.

Based in Porto Alegre, Gerdau (NYSE: GGB) is the latest Brazilian company to come under fire or face a lawsuit due to securities fraud and Brazilian corruption investigations. The lawsuit claims that Gerdau did not disclose that the company and its executives had bribed tax authorities, laundered illegal money and carried out influence peddling, all while defrauding Brazil’s tax revenue service of $429 million dollars.

Raids of the Gerdau offices by Brazilian Federal Police in March 2015 were a part of Operation Zelot, an investigation into tax fraud and bribery of tax revenue agents in Brazil. Operation Zelot uncovered a tax fraud scheme that reportedly included over 70 companies which had bribed members of the CARF, the Finance Ministry department that takes appeals on tax disputes.

In December, 2015, Gerdau was publicly named as a beneficiary of the tax fraud scheme, which caused its stock price to plummet more than seven percent.

At the end of February, Brazilian police carried out a more widespread raid on multiple Gerdau offices, armed with 20 court orders and 18 search warrants. Gerdau‘s CEO Andre Gerdau Johannpeter spoke via email by day’s end, and his statement said that the company had not authorized any illegal negotiations and that they abided by strict ethical standards. However, the next day, Gerdau stock prices fell an additional three percent.

Additionally, when the dust had settled, federal police had accused Gerdau of corruption and tax evasion and indicted 19 staff members, including CEO Johannpeter and other top executives. Again, stock prices fell more than seven percent on this news.

This lawsuit is part of a growing docket of securities fraud cases that were initially unearthed during probes into price-fixing, political kickbacks and bribery at state-led oil company Petroleo Brasileiro SA in 2014.

Currently, the filing law firm is seeking investors that held Gerdau ADRs anytime from June 2, 2011 to May 15, 2016 as potential claimants in its lawsuit. A court must deem the suit meets a minimum criteria to proceed as a class-action suit.

If you are a potential class member, it is crucial that you know all of your rights as they pertain to this suit. Get advice from an experienced law firm that is knowledgeable about securities fraud, corruption, class-action suits and international law.