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JBS Unsanitary Meatpacking and Bribery Scandal Securities Class Action

This class action accuses Brazilian meatpacker JBS of providing false or misleading information in violation of the Securities Exchange Act of 1934. That may sound tame, but the complaint claims that the company touted its emphasis on quality while bribing inspectors and others to overlook “processing rotten meat and running plants with traces of salmonella…”

The class for this action is all persons or entities who acquired the publicly-traded American Depository Receipts (ADRs) of JBS between June 2, 2015 and May 19, 2017.

JBS is a Brazilian company that processes beef, lamb, pork, and chicken products and sells them in Brazil and internationally. In its public filings during the class period, it claimed to emphasize quality:

  • “The care that JBS puts into its products is reflected in its nationally and internationally recognized quality.”
  • “JBS has rigorous processes that permeate its entire chain of production” and are “responsible for the production of reliable, safe, healthy and quality foods.”
  • “We will remain focused on operational excellence and food safety, while we base our business in the highest quality standards…”
  • “At JBS, the quest for quality is more than a strategy. It is part of the Company’s culture.”

The filings also touted its ethical standards, oversight, and compliance:

  • “JBS has certifications that attest to compliance with international norms…”
  • “JBS prepared a Manual of Ethical Conduct that addresses issues related to violations, conflicts of interest, … anti-corruption practices and other sensitive topics.”
  • “Trust is what guides JBA in all of its relations with stakeholders. It therefore pervades the Company’s daily activities.”
  • “The various units of JBS (Brazil) underwent 178 audits in 2015…”

However, the complaint claims that these statements, and many more like them, were false or misleading, because the company did not disclose important information:

  • JBS had been bribing regulators and politicians to subvert inspections of its plants and overlook “unsanitary practices, such as processing rotten meat and running plants with traces of salmonella…”
  • Its Chairman paid monthly bribes to a former Brazilian government official and a lobbyist to guarantee their silence.
  • JBS had received loans from a Brazilian state-owned development bank that showed irregularities.
  • Both the Chairman and CEO made trades that showed signs of insider trading just before a plea deal with the company’s top executives was revealed.

These problems emerged between March and May of 2017, as Reuters, The Wall Street Journal, and the Associated Press published news of falsified sanitation and export certificates, accusations of bribery of inspectors and others, and a two-year investigation, culminating in raids and arrests at JBS facilities. Other news outlets reported on the questionable loans and suspicious trading activities.

At these revelations, the company’s ADR price fell repeatedly.

Article Type: Lawsuit
Topic: Securities

Most Recent Case Event

JBS Unsanitary Meatpacking and Bribery Scandal Securities Complaint

May 22, 2017

This class action accuses Brazilian meatpacker JBS of providing false or misleading information in violation of the Securities Exchange Act of 1934. That may sound tame, but the complaint claims that the company touted its emphasis on quality and compliance, while bribing inspectors to overlook “processing rotten meat and running plants with traces of salmonella…” and other to keep silent. The complaint also claims that the company received questionable loans and its officials engaged in insider trading of its stock.

jbs_bribery_sec_compl.pdf

Case Event History

JBS Unsanitary Meatpacking and Bribery Scandal Securities Complaint

May 22, 2017

This class action accuses Brazilian meatpacker JBS of providing false or misleading information in violation of the Securities Exchange Act of 1934. That may sound tame, but the complaint claims that the company touted its emphasis on quality and compliance, while bribing inspectors to overlook “processing rotten meat and running plants with traces of salmonella…” and other to keep silent. The complaint also claims that the company received questionable loans and its officials engaged in insider trading of its stock.

jbs_bribery_sec_compl.pdf
Tags: Providing False or Misleading Information, Securities, Stock Losses