In re Braskem S.A. Securities Litigation, 246 F. Supp. 3d 731

Background

Plaintiffs are U.S. purchasers of Braskem S.A. ADSs between July 15, 2010 and March 11, 2015, alleging Braskem hid a long-running bribery scheme that produced below‑market naphtha prices and inflated its share price.
Braskem is a Brazilian petrochemical company whose ADSs trade on the NYSE; Odebrecht was a controlling shareholder and allegedly coordinated with Braskem to secure favorable naphtha terms.
SAC relies on Brazilian court testimony and other sources alleging Braskem and Odebrecht paid bribes to Petrobras officials and politicians to rig a naphtha‑pricing formula (dating back to about 2006 and memorialized in a 2009 agreement).
Plaintiffs challenge (a) Braskem/Odebrecht/individuals’ public statements about ethics/compliance and about the bases for naphtha pricing (in Forms 20‑F and 6‑K, sustainability reports, code of conduct, and press releases) as false/misleading by omission, and (b) SOX certifications, asserting §10(b) and §20(a) claims.
On March 11, 2015 media exposure caused a >20% drop in Braskem ADSs; subsequently Braskem and Odebrecht pled guilty to FCPA‑related bribery in December 2016 (post‑pleading).
The Court resolved Rule 12(b)(6) and 12(b)(2) motions: it denied in part and granted in part Braskem/Fadigas’ motion, granted Gradin’s motion, and granted Odebrecht’s motion (for lack of personal jurisdiction).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether general statements about ethics and compliance were actionable omissions	Such statements created an expectation of lawful pricing practices and were misleading absent disclosure of the bribery scheme	Statements were aspirational/puffery and immaterial; no affirmative duty to disclose misconduct	Court: statements about culture, code, and press release are immaterial puffery and nonactionable
Whether SOX certifications/internal controls statements were misleading	Certifications omitted control weaknesses related to bribery that would render them false/misleading	No specific factual allegations that internal controls over financial reporting were deficient	Court: allegations are conclusory; SOX certification claims dismissed
Whether Form 20‑F and Form 6‑K statements about naphtha pricing were misleading omissions	By listing benign market factors for naphtha pricing but omitting the bribery scheme, filings were half‑truths that misled investors about the true drivers of naphtha costs	Filings were not literally false and defendants had no freestanding duty to disclose underlying misconduct	Court: disclosure of bribery was necessary to avoid misleading impression; Form 20‑Fs (2010–2013) and the 2010 Form 6‑Ks survive dismissal as to misleading omissions
Personal jurisdiction over Odebrecht (foreign defendant)	Odebrecht caused U.S. effect by controlling Braskem and participating in market‑directed misstatements; SEC §27 supplies global service	Plaintiffs plead only conclusory control/causation; no specific allegations linking Odebrecht to preparation/approval of the U.S. filings	Court: dismissed claims against Odebrecht for lack of personal jurisdiction (no adequate factual ties to the U.S. filings)

Key Cases Cited

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading standard: plausibility)
Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions vs. factual allegations)
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (scienter: strong inference standard)
Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27 (omission actionable only when necessary to make statements not misleading)
Basic Inc. v. Levinson, 485 U.S. 224 (materiality: "total mix" standard)
TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (materiality standard)
ECA & Local 134 IBEW Joint Pension Trust v. J.P. Morgan Chase Co., 553 F.3d 187 (PSLRA/Rule 9(b) pleading requirements for securities fraud)
City of Pontiac Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752 F.3d 173 (statements of reputation/integrity as nonactionable puffery)
In re Par Pharmaceutical Inc. Securities Litigation, 733 F. Supp. 668 (half‑truths regarding competitive advantage obtained by illegal means can be actionable)
In re Van der Moolen Holding N.V. Securities Litigation, 405 F. Supp. 2d 388 (failure to disclose illicit sources of revenue can support §10(b) claim)
Janus Capital Group v. First Derivative Traders, 564 U.S. 135 (maker of statement concept; limits on aiding/abetting under §10(b))