Gerdau S.A. (NYSE: GGB)
A class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of purchasers of Gerdau S.A. (NYSE: GGB) common stock during the period between June 2, 2011 to May 15, 2016, inclusive (the “Class Period”).
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the Company's business, operations and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company was engaged in a bribery scheme in collusion with Brazil's Board of Tax Appeals ("CARF"); (ii) Gerdau had defrauded Brazilian tax authorities of roughly $9 million in taxes; and (iii) Gerdau's Chief Executive Officer ("CEO"), defendant André Bier Gerdau Johannpeter ("Johannpeter"), and other directors and employees of the Company had engaged in bribery, money laundering and influence peddling. As a result of defendants’ false statements and omissions during the Class Period, the price of Gerdau American Depositary Receipts (“ADRs”) was artificially inflated, reaching close to $10 per share.
On or about March 26, 2015, Brazilian authorities announced that a federal police investigation, dubbed Operation Zelotes, had uncovered a multi-billion dollar tax fraud scheme at the Ministry of Finance ("Finance Ministry"), reporting that as many as 70 companies had bribed members of CARF, a body within the Finance Ministry that hears appeals on tax disputes, to obtain favorable rulings that recused or waived the amounts that the companies owed. On or around March 29, 2015, it was reported that Gerdau was among the companies under investigation.
On December 4, 2015, a Brazilian publication reported that a report by a committee of the National Congress of Brazil had named Gerdau, along with other companies, as a beneficiary of a tax evasion scheme. On this news, the price of Gerdau ADRs fell $0.11, or 6.96%, to close at $1.47 per ADR on December 4, 2015.
On or around February 25, 2016, Brazilian police raided Gerdau’s offices in connection with Operation Zelotes, carrying out some 20 court orders for testimony and 18 search warrants in Recife, Porto Alegre, Rio de Janeiro, Sao Pãulo and Brasília. Gerdau's CEO, defendant Johannpeter, was among the individuals ordered to testify by day's end. In an e-mailed statement, Gerdau stated that the Company had never authorized the use of its name in illegal negotiations and that the Company abided by rigorous ethical standards.
On February 29, 2016, Gerdau announced that it would delay the release of its fourth quarter financial results as the Company "analyze[d] the case records involving Gerdau in the recent phase of [the] Zelotes Operation."
Then on May 16, 2016, various news outlets reported that Brazil's federal police had accused Gerdau of evading $9 million in taxes and indicted a total of 19 Gerdau employees, including defendant Johannpeter and some of the Company's executives, directors and lawyers, on corruption related charges, including bribery, money laundering and influence peddling. On this news, the price of Gerdau ADRs fell $0.13, or over 7%, to close at $1.72 per ADR on May 16, 2016.
If you are a current shareholder and/or purchased stock between June 2, 2011 to May 15, 2016, and would like to discuss your options of exercising your rights as a shareholder, please contact us.
Please submit the following information so we can determine if you qualify for the suit. If you don't know all the specific details, partial information is also acceptable.
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