In this class action plaintiffs alleged violations of the Securities Exchange Act of 1934 and the Securities Act of 1933 arising from allegedly material misstatements and omissions by Brazilian majority-state-owned oil company Petrobras about the value of its assets and other financial matters, internal controls over financial reporting, and the transparency of its management and operations.
The settlement reached in the case will distribute funds to class members who purchased Petrobras securities in both domestic and foreign transactions. Foreign-transaction purchasers have no claim under U.S. securities laws, however, and, as a result, the allocation of funds to them dilutes the recovery for U.S. shareholders with valid claims.
This result was reached by counsel representing both sets of purchasers, despite their sharp conflict of interests. On behalf of class member William Thomas Haynes, CEI is objecting to the inadequate representation provided by class counsel as evidenced by this settlement process and result, as well as to the excessive fees sought by class counsel. Class counsel is seeking fees of $285 million based on nearly $100 million in overbilling in their alleged lodestar where no multiplier of the value of their time is warranted due to the low risk of the litigation or the result where the size of the recovery is largely due to the size of the class, scope of misconduct, and prior government enforcement actions.
Settlement approval is currently pending before the U.S. District Court for the Southern District of New York.