- Company Name
- Tenaris S.A.
- Stock Symbol
- Class Period
- May 1, 2014 to November 27, 2018
- Motion Deadline
- February 10, 2019
- Eastern District of New York
The complaint charges Tenaris and certain of its officers with violations of the Securities Exchange Act of 1934. Tenaris produces and sells seamless and welded steel tubular products and related services for the oil and gas industry and other industrial applications.
Tenaris has “a significant investment in Ternium S.A.,” which manufacturers and processes various steel products and was formed in 2005 by the consolidation of Siderar of Argentina, Sidor of Venezuela (“Sidor”) and Hylsa of Mexico. Tenaris held 11.46% of Ternium’s share capital as of December 31, 2017, and Tenaris and Ternium have the same Chairman of the Board, Paolo Rocca (“Rocca”). In 2008, Venezuela ordered the nationalization of Sidor, and in 2009, Ternium sold its 59.7% stake in Sidor to a Venezuelan state-owned entity for $1.97 billion. It took several years – from 2009 to 2012 – for Ternium to receive the money for the sale of its stake in Sidor.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Tenaris’s business and operations, including that Rocca, CEO and Chairman Tenaris and Chairman of Ternium, knew that one of his company’s executives had paid cash to government officials from 2009 to 2012 to expedite compensation payments for the sale of Sidor and that this conduct would lead to Rocca being charged in a graft scheme and subject Tenaris, its affiliates, and/or executives to heightened governmental scrutiny. As a result of this information being withheld from investors, Tenaris shares traded at artificially inflated prices during the Class Period, reaching a high of more than $46 per share.
Then on November 27, 2018, Bloomberg reported that Rocca had been indicted for his role in the graft scheme, stating that the “judge charged Rocca after the Argentine billionaire testified that one of his company’s executives paid an undisclosed amount of cash government officials in monthly installments from 2009 to 2012” in order to “speed up a compensation payment from Venezuela’s Hugo Chavez for the nationalization of Sidor.” On this news, the price of Tenaris shares fell $2.64 per share, or nearly 10%, to close at $24.36 per share on November 27, 2018.