Lawsuit filed against poultry processor Sadia
A class-action lawsuit has been filed against Brazilian poultry meat processor Sadia S.A.
It has been reported that a class-action lawsuit has been filed in the US District Court for the Southern District of New York on behalf of purchasers of American Depository Receipts of Sadia S.A. between 30 April and 26 September, inclusive, according to Klafter Olsen & Lesser LLP.
Violating Securities Act
The complaint charges the Brazilian processor Sadia and some of its officers and directors with violating the Securities Exchange Act of 1934.
According to reports, it alleges that Sadia and/or certain of its officers knowingly or recklessly did not disclose and misrepresented the following material adverse facts:
(1) That the company had entered into currency derivative contracts that were unnecessary, too large, and in clear violation of the company's hedging policy
(2) That the firm’s exposure to currency contracts was not "nominal", but rather extremely large and speculative
(3) That the company lacked adequate internal and financial controls
(4) That as a result, the company's financial statements were materially false and misleading at all relevant times
On 25 September, Sadia stated that it had faced losses of about $410 mln because of investments in currency contracts hedging against the US dollar. Sadia is a leading Brazilian meat processor.
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