Braskem S.A. Class Action Lawsuit
- Company Name
- Braskem S.A.
- Stock Symbol
- Class Period
- May 6, 2016 to July 8, 2020
- District of New Jersey
The Braskem S.A. class action lawsuit charges Braskem and certain of its officers with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers of Braskem securities between May 6, 2016 and July 8, 2020, inclusive (the “Class Period”). The Braskem class action lawsuit was commenced on August 25, 2020 in the District of New Jersey and is captioned Coutinho v. Braskem S.A., No. 20-cv-11366.
Braskem is purportedly the largest producer of thermoplastic resins in the Americas, based on the annual production capacity of Braskem’s twenty-nine plants in Brazil, six plants in the United States, two plants in Germany, and four plants in Mexico, as of December 31, 2019.
The Braskem class action lawsuit alleges that during the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (i) Braskem’s salt mining operations were unsafe and presented a significant danger to surrounding areas, including nearly two thousand properties; (ii) the foregoing foreseeably increased the risk that Braskem would be subjected to remedial liabilities, including, but not limited to, increased governmental and/or regulatory oversight or enforcement, significant monetary and reputational damage, and/or the permanent closure of one or more of its salt mining operations; (iii) accordingly, earnings generated from Braskem’s salt mining operations were unsustainable; (iv) Braskem downplayed the true scope and severity of Braskem’s liability with respect to its salt mining operations; and (v) as a result, Braskem’s public statements were materially false and misleading at all relevant times.
On April 2, 2019, media sources and, later, Braskem, disclosed that Braskem had been sued by local authorities in connection with a geological event it had purportedly caused in the state of Alagoas, Brazil. Braskem disclosed that the lawsuits were requesting a freeze of approximately R$6.7 billion in assets “to guarantee any potential damages owed to the general public affected by the geological phenomenon which occurred in districts near the rock salt extraction area in Maceió.” On this news, the price of Braskem American Depositary Shares (“ADSs”) fell nearly 6% over two trading days.
Then, on July 9, 2020, Braskem disclosed that authorities in northeastern Brazil had advised Braskem that the geological damage from its salt mining operations was more widespread than initial estimates. Among other things, 1,918 properties needed to be evacuated because of the geological event associated with Braskem’s mining operations, and Braskem estimated that moving the residents would cost Braskem an additional R$850 million in possible payments to those residents, with another additional R$750 million in expenses to “definitively” shut down Braskem’s salt mining operations. On this news, Braskem’s ADS price fell an additional 6.20%.
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