Gerdau Faces Securities Class Action
WASHINGTON, D.C. — U.S. Market Advisors Law Group PLLC announces that a class action lawsuit has been filed against Gerdau S.A. (“Gerdau” or the “Company”) (NYSE: GGB) and certain of its officers. The class action, filed in United States District Court, Southern District of New York, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Gerdau securities as American depositary receipts (“ADRs”) between June 2, 2011 and May 15, 2016, inclusive (the “Class Period”).
Gerdau produces and commercializes steel products worldwide. The Company operates through Brazil Business Operation, North America Business Operation, South America Business Operation, and Special Steel Business Operation segments.
The Allegations Against Gerdau
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational 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 $429 million in taxes; (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; and (iv) as a result of the foregoing, Defendants’ statements about Gerdau’s business, operations, and prospects were false and misleading and/or lacked a reasonable basis.
On or about March 26, 2015, Brazilian authorities announced that a Federal Police investigation, dubbed Operation Zelotes, had uncovered a multibillion-dollar tax fraud scheme at the Ministry of Finance (“Finance Ministry”), reporting that as many as 70 companies had bribed members of the 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, the Brazilian publication Jornal do Comércio 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, Gerdau’s ADR price fell $0.11, or 6.96%, to close at $1.47 on December 4, 2015.
On or around February 25, 2016, post-market, Brazilian police raided Gerdau offices in connection with Operation Zelotes, as police carried 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 this news, Gerdau’s ADR price fell $0.03, or 3.16%, to close at $0.92 on February 25, 2016.
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.”
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, 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, Gerdau’s ADR price fell $0.13, or over 7%, to close at $1.72 on May 16, 2016.
Gerdau Investors Have Legal Options
If you suffered a loss from Gerdau investments you have until July 25, 2016 to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn’t require that you serve as a lead plaintiff. Concerned shareholders who would like more information about their rights and potential remedies can contact attorney David P. Abel (202) 559-8591, [email protected].
About USMA
U.S. Market Advisors Law Group PLLC is a law firm based in Washington, D.C. The firm represents institutional investors from across the world in U.S. securities class action lawsuits.
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