UK’s USS Reaches $2.95 Billion Settlement with Petrobras

Universities pension fund reaches partial settlement of class-action suit.

The £60.5 billion ($82.1 billion) UK-based Universities Superannuation Scheme (USS) has reached an agreement with Brazilian oil and gas company Petrobras to partially settle its securities class action against Petrobras and Petrobras International Finance Company for $2.95 billion.

USS is the lead representative on behalf of investors, who alleged securities fraud violations against Petrobras as the result of a bribery and money-laundering scheme that caused tens of billions of dollars in losses.

The settlement, which is subject to approval by the court, is the largest securities class action settlement in a decade, according to USS, which said it is also the largest settlement ever in a class action involving a non-US issuer, and the fifth-largest class action settlement ever in the US. 

“We have led this securities class action diligently and intensively, and we welcome this important step in the litigation process for the class,” said Jeremy Hill, group general counsel at USS, in a statement. “We are pleased with the settlement agreement which has been reached and which we believe is in the best interests of the class.”

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

The USS is a private pension for universities and other higher education institutions in the UK. Under the terms of the deal, Petrobras has agreed to pay two installments of $983 million each, and a final installment of $984 million.

USS leads one of the two classes of plaintiffs that were certified in an order by the district court in February 2016.

“The fraudulent actions of Petrobras executives have caused significant losses to investors worldwide, many of whom are responsible for the pensions or long-term savings of large numbers of individuals,” said Hill at the time of the class-action certification.

The agreement is intended to resolve all pending and prospective claims by purchasers of Petrobras securities in the US, and by purchasers of Petrobras securities that are listed for trading in the US. Claims against Petrobras’ auditor, PricewaterhouseCoopers Auditores Independentes, are still pending.

The settlement does not indicate any admission of wrongdoing or misconduct by Petrobras, which denies any liability. Petrobras said the settlement is in the company and shareholders’ best interest because the risks of a verdict advised by a jury, particularities of US procedure, and securities laws.

“It eliminates the risk of an adverse judgment which, as Petrobras has previously reported, could have a material adverse effect on the company and its financial situation, and puts an end to the uncertainties, burdens, and costs of protracted litigation,” said Petrobras in a release.

Tags: , , , ,

«