BRF S.A. (Brazil)
ISINs: BRBRFSACNOR8 (Common Stock)
Relevant Period: April 04, 2013 - November 29, 2019
Deadline: February 28, 2020
BRF S.A. (“BRF”) is a Brazilian company and the world’s largest poultry exporter. BRF is headquartered in São Paulo, Brazil and its common stock is listed on the Brazilian exchange, B3 S.A.- BRASIL, BOLSA, BALCÃO (“B3”) formerly the BM&F BOVESPA. Since March 2017, BRF has been involved in a corruption, fraud, and bribery scandal causing BRF’s stock price to decrease from BRL 40.00, where it closed on March 16, 2017, to BRL 25.16 where it closed on March 7, 2018, a decrease of almost 40%, representing a market capitalization loss of almost BRL 10 billion that can be directly tied to BRF's fraudulent, corrupt, and illegal activites. To date, the stock still has not recovered as the company struggles to recovery from the scandal.
On March 17, 2017, BRF was one of several meatpackers whose offices were raided by Brazilian federal police in what is known as “Operation Weak Flesh.” The probe uncovered that between 2012 and 2017, BRF engaged in fraud to evade food safety checks, including bribing inspectors and politicians to overlook unsanitary practices and falsify test results related to the safety of the company's industrial processes. Upon news of the raid, BRF’s stock price fell 8.3% from BRL 40.00 on March 17, 2017, to BRL 36.30 by March 20, 2017. Then on March 5, 2018, Brazilian federal police arrested BRF’s former Chief Executive Officer Pedro de Andrade Faria on charges that he and other executives, including the Company’s Vice President of Global Operations, Hélio dos Santos Júnior, were aware that BRF committed fraud by trying to avoid food safety checks. Following the former CEO’s arrest, BRF’s stock dropped almost 19% from BRL 30.84 on March 2, 2018, to BRL 25.16 on March 7, 2018.
Between 2012 and2017, BRF misrepresented and otherwise omitted material information relating to its operations in its public disclosures. For the years 2012-2016, BRF published statements in its annual reports certifying that it was committed to the manufacture and sale of safe, healthy products by committing to quality and food safety in all of its operations. BRF also stated that it conducted business in strict compliance with all anti-bribery and anti-corruption legislation, condemning all forms of corruption and affirmatively stating that it acted in an ethical manner when dealing with government authorities. The statute of limitations to file a claim under the relevant Brazilian law is three years and is set to expire on March 17, 2020. As such, DRRT will filing a request for arbitration in early 2020 on behalf of a group of institutional investors.
JBS S.A. (Brazil)
ISINs: BRJBSSACNOR8 (Common Stock)
Relevant Period: May 24, 2013 - May 31, 2017
Deadline: February 28, 2020
JBS S.A. (“JBS”), a Brazilian company headquartered in Sao Paulo, is the largest meat processing company in the world and the second-largest food company in the world. JBS’ common stock is listed on the B3 S.A.- BRASIL, BOLSA, BALCÃO (“B3”) formerly the BM&F BOVESPA. JBS has been involved in a corruption, fraud, and bribery scandal involving many of Brazil’s top government officials for over a decade. Therefore, for obvious reasons including but not limited to criminal prosecution, JBS failed to disclose to investors that the company’s accelerated growth and newfound position as the world’s largest meat packaging company was perpetrated by bribing public officials. The bribes enabled JBS to skirt sanitary and environmental regulations and obtain favorable financing from the Brazilian state-owned National Economic and Social Development Bank (BNDES) and its subsidiary BNDES Participações S.A. (BNDESPar). JBS utilized the favorable financing it received as a result of the bribes, to aggressively expand its operations for a ten-year period beginning in 2006. Joesley Batista, former President of JBS, confessed that he agreed to pay bribes to government officials at a rate equivalent to 20% of the accrued benefit received from favorable tax treatment. On May 26, 2017, the Comissão de Valores Mobiliário (Brazilian Securities Market Authority) opened an administrative proceeding against JBS. After the market closed on May 30, 2017, it was announced that JBS’ controlling stockholder, J&F Investimentos S.A., the Batista family’s holding company, agreed to pay a USD $3.2 billion fine for JBS’ role in the bribery scandals.
DRRT committed early on to organize, fund and supervise a risk-free group arbitration against JBS in Brazil under the mandatory and exclusive arbitration regime of the Market Arbitration Chamber (“MAC”). With the statute of limitations on Brazilian claims under the Brazilian Companies Act and other applicable laws expiring in mid-March 2020, DRRT will initiate a securities arbitration by early March 2020.
Danske Bank A/S (Denmark)
Relevant Period: February 07, 2013 - October 24, 2018
Deadline: March 06, 2020
Since 2018, Danske Bank A/S ("Danske") has been the center of one of the largest money-laundering scandals the world has ever seen. The scandal centers on Danske’s Estonia branch and its suspicious non-resident transactions. For years, Danske said nothing publicly about the issue and even misrepresented the extent of its participation in the scheme. This was done while Danske repeatedly promoted its anti-money laundering policies and practices to the public. However, on February 27, 2018, several reports emerged indicating that Danske’s upper management had engaged in a cover-up of the scheme as Danske continued to grow its non-resident portfolio. Specifically, it was reported that in 2013, a whistleblower informed Danske that relatives of the Russian president, Vladimir Putin, and high-ranking members of the FSB (formerly the KGB) were behind one of the UK companies laundering money through the Estonian branch. On September 19, 2018, Danske issued an 87-page report confirming the knowledge and complicity of senior management in the massive money-laundering scandal. The report also revealed that the cash flow from non-residents through Danske's Estonia branch was a staggering amount – approximately $234 billion/ €200 billion. In response, Danske’s shares lost 50% and suffered a staggering DKK 12.8 billion in market capitalization losses. As a result, DRRT has initiated action against Danske in Copenhagen Denmark with local counsel, filing complaints against Danske on behalf of 232 institutional investors on March 16, 2019, and between October 16-18, 2019, totaling nearly DKK 5.3 billion in damages. DRRT is now looking to file a third wave of complaints in the first quarter of 2020. This case is currently ongoing.
Kobe Steel, Ltd. (Japan)
Relevant Period: May 31, 2013 - October 31, 2019
Deadline: March 10, 2020
Kobe Steel, Ltd (“Kobe”) is Japan’s third-largest steelmaker, as well as a major supplier of aluminum, copper and other products around the world. Founded in 1905, with over 36,000 employees, Kobe and its group of companies have a presence in Japan, North America, South America, Asia and Europe. On October 8, 2017, Kobe admitted that, in order to meet quality standards, it had been falsifying test data for its aluminum and copper parts, which data was incorporated into reports on Kobe product strength and durability. Several days after the October 8, 2017 disclosure, it was reported that the falsified data extended to additional Kobe Steel products. According to Kobe, the falsified reports were discovered in inspections it conducted on products shipped to customers between September 2016 and August 2017. On March 6, 2018, Kobe released findings from an external investigation that confirmed management knowledge of the fraudulent reporting going back five decades. As a result, Kobe CEO, Hiroya Kawaska resigned. Finally, on June 5, 2018, prosecutors and police raided Kobe offices.
Prior to the disclosures, Kobe had forecast net profits of ¥35 billion ($308 million) for the financial year ending in March 2018. Kobe now admits that “it is difficult at this time to estimate the impact of the improper conduct concerning products of Kobe Steel and its group companies on business performance.” Kobe’s stock price originally dropped almost 40% from October 8 to October 13, and recovered then by November 2 to stay almost 20% down until the end of 2017 (a market cap loss of almost ¥100 billion). Amidst all of the uncertainties, Kobe also canceled a previously planned interim stock dividend. DRRT filed is first complaint against Kobe in Tokyo District Court on June 20, 2019 claiming over ¥5 billion in damages.
Vale S.A. (Brazil)
ISINs: BRVALEACNOR0, BRVALEACNPA3
Relevant Period: April 29, 2014 - October 31, 2019
Deadline: April 30, 2020
Vale, S.A., incorporated and publicly traded in Brazil, is the world’s largest iron ore mining company with 80,000 employees and annual revenues exceeding $36.575 billion. The first dam collapse of the Samarco dam, which was co-owned by Vale and Australia’s BHP Group, took place in November 2015, causing 19 facilities, the destruction of two villages, and significant environmental contamination. The Samarco dam was constructed utilizing a primitive upstream design, the most inexpensive way to construct a dam, and unsurprisingly, the most prone to failure.
On January 25, 2019, a second chemical waste dam, owned and operated by Vale, near Brumadinho, Minas Gerais, a small town in southeastern Brazil, collapsed. Although the environmental impact of Brumadinho was not as severe as the Samarco disaster, the human impact was staggering resulting in 249 fatalities. This second dam disaster caused Brazilian authorities to issue severe fines and to arrest several top company employees. As a result, Vale’s stock price dropped over 20% causing the company to lose close to $10 billion in market capitalization. In the immediate aftermath of the Brumadinho catastrophe, Vale suspended its planned dividend, share buybacks, and executive bonuses. Moreover, the Brazilian court issued three orders freezing $2.9 billion of Vale assets. Additionally, Brazil's environmental agency (Ibama) fined Vale $66.3 million for pollution and other regulatory violations related to the breach. On September 20, 2019, Brazilian police announced criminal charges against Vale, and its employees.
According to the Wall Street Journal, Vale’s executive manager for strategic planning, Lúcio Cavalli, said at a press conference in 2015, shortly after the Samarco disaster, that Vale did not have any upstream dams in its portfolio. Other Vale executives also told investors that Vale had no upstream dams. When an analyst asked in a July 2016 conference call about a possible ban on upstream chemical waste dams, the head of Vale’s iron-ore division, Peter Poppinga, responded that “such a prohibition wouldn’t affect the company” and “we don’t have those dams.” Yet, Vale was still operating almost 30 upstream chemical waste dams at that time.
When Fabio Schvartsman, was named Vale CEO in March 2017, he committed to changing Vale’s safety record, vowing “Samarco never again” among a variety of other false and misleading statements made to restore investor confidence.
Further, in the months since the dam collapse, prosecutors have identified ample evidence that employees at Vale and the Brazilian division of Germany’s TUV SUD, which inspected the dam, were aware of elevated risks associated with the structure with Reuters reporting that Vale misrepresented the steps it had taken to mitigate safety issues following the first dam collapse in 2015. On January 21, 2020, Brazilian prosecutors charged Fabio Schvartsman with homicide and charged Vale, TUV SUD, Schvartsman, and 15 individuals with environmental crimes stemming from the dam collapse.
With clear and obvious knowledge of the existence of its upstream chemical waste dams and the risks associated therewith since an internal report of 2009 and later even more-so after the Samarco collapse in 2015, Vale decided to mislead and defraud investors through false assurances and statements concerning operational safety. As a result of the publicly available information, and ongoing government investigations, there is strong evidence against Vale holding liable for shareholder losses that were a direct result of Vale’s material misstatement omissions.
The material misstatements and omissions made by Vale violated the Brazilian Civil Code and Brazilian Corporation Law. The Statute of Limitations to file these claims under the applicable Brazilian law is three years and is set to expire on January 25, 2022. As a publicly traded company on Brazil’s Sao Paulo stock exchange, Vale’s bylaws mandate that any shareholder disputes with the company must be arbitrated in front of the B3’s affiliated Market Arbitration Chamber (“MAC”), an institution of the B3 - Brasil Bolsa Balcão S.A., formerly BM&FBOVESPA in Brazil. DRRT has requisite experience under the authority of MAC. Accordingly, DRRT has already retained a highly respected local arbitration firm, as well as a highly acclaimed Brazilian economist.
Institutional investors can join a fully-funded and insured opt-in arbitration group of similarly situated, institutional investors. The confidential representation of investors is risk-free and cost-free and purely based on a back-ended success fee. If you wish to obtain an analysis of your potential claims Brazil under the authority of MAC, please provide your transaction data for the ISINs listed above covering the Relevant Period to Valeinvestorclaims@drrt.com. As customary, all data and information received will be analyzed on a confidential basis.
Bayer AG (Germany)
ISINs: DE000BAY0017, DE000A189F04, DE000A189FZ7
Relevant Period: May 22, 2016 - November 29, 2019
Deadline: April 30, 2020
On May 23, 2016, Bayer AG (“Bayer”), a German pharmaceutical and life science corporation, announced that it made an offer to purchase Monsanto Corp., a U.S. agriculture corporation, despite Monsanto’s pre-merger issues relating to its glyphosate-based weed killer Roundup. Bayer should/could have been aware of these issues when acquiring Monsanto, which have now resulted in tens of thousands of lawsuits with risks for billions of dollars of jury verdicts against Bayer as its legal successor, and consequently have a negative effect on the stock price of Bayer. Bayer knew or should have known about the risks resulting from the merger with Monsanto due to the fact that the glyphosate-based product from Monsanto was already highly contested for a long time and because of the obviously hidden information concerning the risks that made a comprehensive due diligence impossible. On September 14, 2016, Bayer entered into an agreement with Monsanto to purchase its shares for $128 a share, a 44% premium over Monsanto’s May 9, 2016, closing price. Due to regulatory requirements, the acquisition was not completed until June 7, 2018. Since, then the value of Bayer’s common stock has gradually plummeted connected mostly to the unsuccessful defense of high-profile personal injury lawsuits triggered by the Monsanto/Roundup issues, resulting in multi-million U.S. dollar verdicts against Bayer. After the announcement of the first verdict of $289 million against Bayer, its stock price dropped from August 10-13, 2018 by 10.76%, resulting in a market capital decrease of €9.36 billion. On October 22, 2018, Bayer’s stock price sunk another 13.38% when the San Francisco’s Superior Court of California reduced the punitive damages award to US$39 million. Then, on March 27, 2019, a jury awarded a different plaintiff $80 million in damages citing that Monsanto “acted with malice or oppression” by not placing a cancer warning on Roundup’s product label. The stock price declined another 18.55%. On May 13, 2019, a jury awarded $ 2.055 billion to two plaintiffs who claimed that Roundup had caused their cancer. Even though, the court later reduced the punitive damages award to $69 million. Bayer has appealed these verdicts, and is vehemently arguing that Roundup does not pose a threat to human health. However, since July 30, 2019, Bayer is in mediation to settle thousands of U.S. lawsuits claiming that the company’s Roundup weed killer causes cancer. Analysts expect a settlement to reach an amount of $8 billion.
DRRT is committed to filing a case against Bayer AG in Germany, has received co-funder commitment. Hence, DRRT is currently preparing for the filing of the case, including further economic analysis preparations and legal analysis of the case.
Daimler AG (Germany)
ISINs: DE0007100000/D1668R123 (Common Stock)
Relevant Period: July 10, 2012 - December 31, 2018
Deadline: April 30, 2020
On September 18, 2015, the Volkswagen manipulation scandal was revealed. Even though Daimler AG ("Daimler") was not mentioned at the time, its stock price began a steady drop that topped at 16%, losses totaling €12.35 billion. As a response, Daimler’s CEO, Dieter Zetsche called a press conference on September 26 on which he categorically denied any emission manipulation, assuring investors that he was personally involved in all development projects. This explicit denial was included in Daimler’s 2015 Annual Report. Daimler’s price began a slow process of recovery. Less than a month later, on July 21, 2017, Der Spiegel revealed that the German car manufacturers: Volkswagen AG, Daimler AG, Bayerische Motoren Werke AG (BMW), Audi AG and Dr. Ing. H.c. F. Porsche AG (together the “cartel”) had been acting in concert since 1996 to suppress competition, gain and keep market share and increase their own profits. As a result of the revelations, Daimler’s stock price fell considerably, experiencing a 7.21%, drop from July 20 to 31, 2017 (€4.93 billion in market cap losses). Further investigations led to several raids on Daimler's headquarters and on June 2018, the German Transport Authority (KBA) ordered a recall of 238,00 Daimler vehicles due to the use of illegal defeat devices. In total, 774,000 vehicles have been recalled in Europe.
On December 30, 2019, DRRT, represented by local counsel, filed a complaint on behalf of 219 institutional investors claiming €896 million in damages before the Regional Court of Stuttgart. The complaint seeks compensation for purchasers of Daimler common stock (ISIN DE0007100000) between July 10, 2012 to June 20, 2018 (so-called disinformation period), during which Daimler breached its disclosure obligations under German capital market law. Daimler failed to inform the investing public about its use of illegal defeat devices in its diesel vehicles and of the associated risks and costs for investors. DRRT plans to file a second complaint for interested institutional investors in 2020.
LIBOR (The Netherlands)
Relevant Period: January 01, 2005 - December 31, 2012
Deadline: July 31, 2020
It is alleged that various panel banks manipulated (“rigged”) LIBOR and EURIBOR rates for several years, by submitting artificially low rates to falsely convey the impression that the banks were in a better financial condition than they actually were and to pay lower interest rates on LIBOR/EURIBOR-based financial instruments and products that they sold to investors, thereby causing damages to these investors. Moreover, it is alleged that the banks also manipulated LIBOR and EURIBOR to benefit their own books and trading positions, by artificially inflating or depressing the interest rates, which – given the large amounts of trades at stake – resulted in substantial financial gains for the manipulating banks. In preparation of a potential recovery action outside of the US, DRRT has set-up a Dutch Foundation and sent a demand letter to its chosen defendant, tolling the statute of limitations until 2022 on behalf of all investors that have jointed or will join DRRT’s investor protection foundation, organized under § 3:305a of the Dutch Civil Code.