Robbins LLP: Gerdau S.A. (GGB) Misled Shareholders According to a Recently Filed Class Action
Robbins LLP announces that a class action complaint was filed against Gerdau S.A. (NYSE: GGB) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of Gerdau American depositary receipts (“ADRs”) between June 2, 2011 and May 15, 2016, for alleged violations of the Securities Exchange Act of 1934 by Gerdau’s officers and directors. Gerdau produces and commercializes steel products worldwide.
Gerdau Accused of Engaging in Bribery and Money Laundering
According to the complaint, throughout the class period, Gerdau submitted multiple filings with the U.S. Securities and Exchange Commission stating that the financial information was accurate and disclosed any material changes to the company’s internal controls over financial reporting. However, the complaint alleges that Gerdau officials failed to disclose adverse facts about the company’s business, operations, and prospects, including that: (i) the company was engaged in a bribery scheme in collusion with Brazil’s Board of Tax Appeals (“CARF”), a body within the Ministry of Finance that hears appeals on tax disputes; (ii) Gerdau had defrauded Brazilian tax authorities of roughly $429 million in taxes; and (iii) Gerdau’s Chief Executive Officer and other executives, directors, and employees of the company engaged in bribery, money laundering, and influence peddling.
On March 26, 2015, Brazilian authorities announced that a federal police investigation had uncovered a multibillion-dollar tax fraud scheme at the Ministry of Finance, reporting that as many as 70 companies had bribed members of the CARF to obtain favorable rulings that recused or waived the amounts the companies owed. On March 29, 2015, it was reported that Gerdau was among the companies under investigation. Then, on February 25, 2016, Brazilian police raided Gerdau offices, carrying out 20 court orders for testimony and 18 search warrants. On February 29, 2016, Gerdau announced that it would delay the release of its fourth quarter financial results as the company analyzed the case records involving Gerdau in the recent phase of the investigation. On May 16, 2016, various news outlets reported that Brazil’s federal police had accused Gerdau of evading $429 million in taxes and indicted a total of 19 Gerdau personnel on corruption related charges. On this news, Gerdau’s ADR price fell $0.13, or over 7%, to close at $1.72 on May 16, 2016.
Gerdau Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.