Important Securities Action Against Brazil's BRF S.A.
A securities fraud class action has been filed against BRF S.A. The Brazilian food processor and the world’s largest poultry exporter has been accused of paying bribes to regulators and politicians to subvert inspections to conceal unsanitary practices. Criminal arrests and charges have been brought against the CEO and others. These events have caused a significant decline in the Company’s ADRs, damaging investors. Investors desiring to participate as a lead plaintiff until May 11, 2018 to take action.
Interested investors may directly contact David P. Abel, Managing Attorney of USMA Law Group, to discuss this matter at no obligation or cost: (202) 274-0237, [email protected].
Company Description: BRF is a food processor and the world’s largest poultry exporter. Its portfolio includes established brands in Brazil and abroad, such as Sadia, Perdigão, Qualy, Chester, Perdix and Paty. The Company provides meat (poultry and pork), foods processed from meats, pizzas, pastas and frozen vegetables.
Headquarters: São Paulo, Brazil
Market Capitalization: $5,381,506,480
Securities Implicated: ADR (ISIN: US6024961012)
Industry: Packaged Foods & Meats; 30202030
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) BRF employees paid bribes to regulators and politicians to subvert inspections in order to conceal unsanitary practices at the Company’s meatpacking plants; (ii) the foregoing conduct, when it came to light, would foreseeably subject the Company and its officers to heightened regulatory enforcement and/or prosecution; and (iii) as a result of the foregoing, BRF’s public statements were materially false and misleading at all relevant times.
On March 17, 2017, news outlets reported that Brazilian federal police had raided the offices of BRF and dozens of other meatpackers following a two-year investigation into alleged bribery of regulators to subvert inspections of their plants. The probe, known as “Operation Weak Flesh”, had uncovered some 40 cases of meatpackers who had bribed inspectors and politicians to overlook unsanitary practices, such as processing rotten meat and running plants with traces of salmonella. According to media reports, police found evidence that the companies were tampering with packages to sell products that had already expired and that higher-than permitted levels of parts such as “pig heads” were mixed with sausages and cold cuts. Police arrested three BRF employees, as well as 20 public officials.
On this news, BRF’s ADR price fell $0.99, or 7.73%, to close at $11.81 on March 17, 2017.
On February 23, 2018, the Company held an earnings conference call with investors and analysts to discuss the Q4 2017 earnings results. In the call, Chairman of the Board Abilio Diniz and CFO Lorival Luz discussed the impact of “Operation Weak Flesh.”
On this news, BRF’s ADR price fell $0.76, or 8.00%, to close at $8.73 on February 23, 2018.
On March 5, 2018, Reuters reported that Brazilian federal police arrested BRF’s former Chief Executive Officer (“CEO”) Pedro de Andrade Faria (“Faria”) on charges that he and other executives, including the Company’s Vice President of Global Operations Hélio dos Santos Júnior, were aware that BRF committed fraud by trying to avoid food safety checks. According to the report, the “police cited evidence that five laboratories accredited by the Agriculture Ministry colluded with the analysis department of BRF to “falsify” test results related to the safety of its industrial process.” In a court ruling authorizing the arrests, Brazilian federal judge André Duszczak said “Faria and other BRF officers sought to cover up claims of possible food contamination, as shown in certain laboratory tests, made by a former employee in a labor lawsuit.”
On this news, BRF’s ADR price fell $1.83 or 19.42% to close at $7.59 on March 5, 2018.