RIO DE JANEIRO, Dec 8 (Reuters) - State-controlled oil company Petroleo Brasileiro SA and its top executives face a class-action lawsuit in a federal court in New York over an alleged contract fixing, bribery and kickback scheme that lawyers say inflated the value of the company's assets.
The suit was filed by law firm Wolf Popper LLP in the Southern District of New York on Monday on behalf of investors who bought U.S.-traded shares of the Brazilian company, commonly known as Petrobras, between May 20, 2010, and Nov. 21, 2014.
The case, which will require a judge to certify that a class action can proceed in civil court, seeks a jury trial and as yet unspecified damages.
The complaint alleges that Rio de Janeiro-based Petrobras "made false and misleading statements by misrepresenting facts and failing to disclose a culture of corruption at the company that consisted of a multi-billion dollar money-laundering and bribery scheme embedded in the company since 2006."
During the period covered by the lawsuit, Petrobras' market value dropped to about $60 billion from about $150 billion, even though the company sold nearly $70 billion in new shares in September 2010 in what was then the world's largest-ever offering of stock.
Petrobras officials were not immediately available for comment. A copy of the suit filed with the court on Monday says Wolf Popper is working with Brazilian firm "Almeida Advogado."
"U.S. securities law is a significant factor in deterring this kind of behavior," Robert C. Finkel, a Wolf Popper attorney working on the case, said in a telephone interview from New York. "The only way you can deter this kind of behavior is by fining executive officers liable for securities fraud."
The preferred shares of Petrobras, the company's most-traded class of stock, slumped 6.2 percent to 11.50 reais in Sao Paulo on Monday, a nine-year low. The company's U.S.-traded common shares dropped 6.7 percent to close at $8.23.
Finkel is confident he will be able to enforce judgment on Petrobras and its executives if he wins. Investors interested in becoming lead plaintiffs have until Feb. 6 to file a motion with the court, a Wolf Popper statement said.
"There is a good track record for dealing with cases related to the U.S. Foreign Corrupt Practices Act," he said. "They registered their securities here, they are subject to U.S. law."
The suit said investors were harmed because Petrobras over valued its assets, the result of a scheme in which Petrobras and contractors inflated the cost of contracts. According to Brazilian investigators, much of the over-charging was passed on to political parties and politicians in the form of campaign contributions and bribes. (Reporting by Jeb Blount. Editing by Andre Grenon)