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In re Petrobras Securities Litigation continues to produce interesting developments – this time on SLUSA preemption and Brazilian law.  On March 12, 2016, the U.S. District Court for the Southern District of New York held that the Securities Litigation Uniform Standards Act (“SLUSA”) does not preempt claims asserted under foreign law and that Brazilian law requires a plaintiff to have actually realized loss on the securities transactions at issue.

Introduction

The Modern Slavery Act 2015 is new legislation introduced in the UK with the intention of combatting slavery and human trafficking.  Continuing the trend for legislation to have extra-territorial reach, as illustrated by the UK Bribery Act, it can apply to entities based outside of the UK.

Of particular importance to businesses is Section 54. This contains a requirement for certain businesses to state annually and publicly the steps they have taken to ensure that their business and supply chains are free from human trafficking and slavery (a “Section 54 Statement“).

Ageas (the former Fortis) and several organizations representing Fortis shareholders announced yesterday a EUR 1.204 billion settlement of shareholder claims under the Dutch Act on Collective Settlement of Mass Claims (the “WCAM”). The proposed settlement, which is subject to approval by the Amsterdam Court of Appeal, marks the reemergence of the Netherlands as a potential forum for classwide resolution of transnational disputes that can no longer be resolved in the United States (or virtually anywhere else in the world).

The United States District Court for the Southern District of New York yesterday certified two classes of investors who had purchased Petrobras securities on U.S. exchanges or in other U.S. transactions. The February 2, 2016 decision in In re Petrobras Securities Litigation held that potential questions about whether foreign courts would recognize a U.S. class-action judgment and whether individual off-exchange purchasers bought their Petrobras securities in U.S. transactions did not preclude class certification.

Much ink has been spilled since the Supreme Court’s 2010 decision in Morrison v. National Australia Bank about the federal securities laws’ applicability to foreign transactions in foreign securities.  But what happens when non-U.S. residents sue in the United States under foreign law based on U.S. securities transactions?

The travails of Petrobras have generated a lot of attention – and litigation – in the past year.  On July 30, 2015, District Judge Jed Rakoff, of the Southern District of New York, issued an opinion explaining his prior order largely denying the defendants’ motions to dismiss U.S. securities-law claims filed on behalf of a putative class of purchasers of Petrobras’s sponsored American Depository Shares, which are listed on the New York Stock Exchange.  In re Petrobras Securities Litigation.  But the court dismissed the claims of purchasers who – in addition to buying Petrobras securities on the NYSE or in other U.S. transactions – had also bought Petrobras securities on the Brazilian stock exchange (the “Bovespa”) and had sought to assert claims under Brazilian law as to those purchases.  The court ruled that the Brazilian-law claims were subject to a mandatory arbitration bylaw that Petrobras had adopted in 2002 by board resolution and shareholder vote.

On July 17, 2015, Louis Berger International, Inc., a New Jersey-based construction management company, entered into a deferred prosecution agreement (DPA) with the Department of Justice under which it agreed to pay a $17.1 million penalty for violating the Foreign Corrupt Practices Act (FCPA). In addition to the hefty penalty paid, the company agreed to implement rigorous internal controls, continue to cooperate fully with the department, and retain a compliance monitor for at least three years.

According to the DPA, from 1998 through 2010, the company paid approximately $3.9 million in bribes to officials in India, Indonesia, Vietnam, and Kuwait to win construction management contracts. The company concealed the crimes by recording them as “commitment fees,” “counterpart per diems,” “marketing fees,” and “field operation expenses.”  Company employees and agents also submitted inflated and fictitious invoices to generate cash that was then later used for the payment of bribes through intermediaries. Two former executives of the company also pleaded guilty to conspiracy and FCPA charges in connection with the scheme.