OTS - International Alliance AAE Files Lawsuit Against Brazilian Electricity Giant Eletrobras in Federal Court in New York
2019. October 30. 16:15
Frankfurt, 30 October, 2019 (APA/OTS) - AAE Management for Energy
Equipment LLC ("AAE"), a company of the Al Mazrouei Group, one of
the most important business groups in the United Arab Emirates,
along with its North American affiliate Eagle Equity Funds LLC, and
German affiliate AHG Vermögensverwaltung, has filed a lawsuit in
the United States District Court of the Southern District of New
York (No. 19-cv-09344) against Centrais Elétricas Brasileiras S/A
- Eletrobrás ("Eletrobras"), the largest producer and distributor
of electric and nuclear energy in South America, and several of its
officers/directors, alleging violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and accompanying
regulations, as well as state law.
694 Bearer Bonds, worth more than U.S. $5.2 billion
AAE's claims arise out of statements in Eletrobras' filings
with the United States Securities and Exchange Commission ("SEC")
regarding Eletrobras' obligations under certain Bearer Bonds and
other obligations that were issued under Brazil's Compulsory Loan
Program. AAE and its affiliates are the holders of 694 of these
Bearer Bonds, which are worth more than U.S. $5.2 billion.
Eletrobras has refused to honor or convert these Bearer Bonds into
shares, pursuant to the terms of the Bonds. The lawsuit alleges
that Eletrobras has misrepresented in its SEC filings and other
public statements that the Bearer Bonds are unenforceable, thereby
omitting billions of dollars in liability under those Bonds from
its balance sheet, and has minimized billions of dollars more in
other obligations under the Compulsory Loan Program. By doing so,
AAE alleges that Eletrobras has devalued the Bearer Bonds and has
inflated the value of its stock.
In 2015, as a result of facts uncovered during the "Operation
Carwash" investigation of the other state-run Brazilian oil company
PetróleoBrasileiro S.A. ("Petrobras"), Eletrobras commenced an
internal investigation, which did not conclude until April 2018. As
a result of these issues, Eletrobras was not able to timely file
its 2014 or 2015 annual reports and, as a result, the New York
Stock Exchange suspended trading in Eletrobras' ADRs and commenced
de-listing procedures in May 2016. Although trading in Eletrobras'
ADRs ultimately resumed on October 12, 2016, Eletrobras
acknowledged as a result of the investigation that it did not have
adequate internal controls. Eletrobras later settled a securities
class action in the Southern District of New York in connection
with its involvement in that fraud for $14.75 million, and shortly
thereafter, in December 2018, Eletrobras agreed to pay an
additional U.S. $2.5 million in civil penalties in a settlement
with the SEC for "inadequate internal controls" and violations of
the Foreign Corrupt Practices Act in connection with Operation
Carwash.
AAE is represented by Kahn Swick & Foti, LLC
AAE is represented by Lewis Kahn, Michael Palestina, and
Melissa Harris of Kahn Swick & Foti, LLC, one of the United States'
premier boutique securities litigation law firms. Among the many
federal securities fraud and shareholder derivative lawsuits around
the country in which they have achieved substantial recoveries, KSF
was Co-Lead Counsel in In Re Eletrobras Securities Litigation, Case
No. 1:15-cv-05754 (Consolidated) (S.D.N.Y.) against Eletrobras and
several of its former directors and officers. KSF represented U.S.
investors after the company reported large losses related to a
sprawling corruption scandal in Brazil. After nearly three years of
protracted litigation, KSF achieved a settlement of $14.75 million
for investors. In In re Petrobras Securities Litigation, No.
1:14-cv-9662 (S.D.N.Y.), KSF was a Member of the Plaintiffs'
Steering Committee for the Individual Actions ("PSC"), in
coordination with the federal securities class action against
Brazil's state-controlled petrochemical company arising from
"Operaç?o Lava Jato," the largest corruption scandal in the history
of Latin America, whereby Plaintiffs alleged Defendants
deliberately overpaid on various construction contracts in return
for kickbacks. As a Member of the PSC, KSF was found by the Court
to have "made a substantial contribution to the class," June 22,
2018 Opinion and Order at 39 (D.E. 834), the result of which was a
settlement of $3 billion for investors, which returned
approximately 65% more to shareholders than received in other
individual actions.
Press Contact AAE Management LLC
Hoh PR Agency,
Clemens Hoh,
Tel: 004961724998133
ch@hoh-pr.de
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