Doubleline Capital LP v. Odebrecht Fin., Ltd. (323 F. Supp. 3d 393, 2018)

Citations

323 F. Supp. 3d 393

Full opinion text

GREGORY H. WOODS, United States District Judge

In 2014, Brazil found itself embroiled in what has become a widely publicized scandal. Brazilian authorities launched an investigation (Operation "Lava Jato" or "Car Wash") into a sprawling bribery and kickback scheme. Construction and engineering conglomerates were accused of bribing government officials in order to secure lucrative contracts. Not initially implicated in the scandal, Defendant Odebrecht, S.A. and several of its subsidiaries later joined the ranks of those targeted by Brazilian prosecutors and police investigators. Odebrecht's CEO was arrested, indicted, and sentenced to prison in connection with his participation in the scheme. Odebrecht itself pleaded guilty to charges brought against it in the Eastern District of New York. Plaintiffs, who purchased substantial quantities of Notes issued by Defendant Odebrecht Finance, Ltd. and guaranteed by Defendant Construtora Norberto Odebrecht ("CNO"), saw the value of their holdings drop precipitously after news of Defendants' participation in the bribery scheme. Plaintiffs filed suit, asserting claims against Defendants under Section 10(b) and 20(a) of the Exchange Act, as well as various state law claims. Defendants Odebrecht Finance, CNO, and Odebrecht Engenharia E Construção S.A. ("OEC") have moved to dismiss Plaintiffs' claims. Because Plaintiffs adequately plead that CNO's failure to disclose its participation in the bribery scheme rendered its explanation for its success materially misleading, Plaintiffs' Section 10(b) claim with respect to that statement survives. And because Plaintiffs sufficiently plead their intentional fraudulent conveyance claim, that claim also survives dismissal. Defendants' motion is granted with respect to Plaintiffs' remaining claims against the moving Defendants.

I. BACKGROUND

A. The Parties

Plaintiff DoubleLine Capital LP is a Delaware limited liability company. Second Amended Complaint (ECF No. 41) ("SAC") ¶ 11. It brings claims on behalf of its advisory client. Id. Plaintiff DoubleLine Income Solutions Fund is a Massachusetts business trust. Id. ¶ 12. Plaintiff DoubleLine Funds Trust is a Delaware statutory trust. Id. ¶ 13. It brings claims on behalf of DoubleLine Core Fixed Income Fund Series, DoubleLine Emerging Markets Fixed Income Fund Series, and DoubleLine Shiller Enhanced Cape® Series. Id.

Defendant Odebrecht, S.A. ("Odebrecht") is a Brazil-based corporation. Id. ¶ 14. Through its subsidiaries, Odebrecht operates in the construction, engineering, infrastructure, chemical, utilities, and real estate businesses. Id. ¶ 29. Odebrecht and its subsidiaries conduct business in Brazil and twenty-seven other countries, including the United States. Id. Marcelo Odebrecht has served as the company's president and Chief Executive Officer ("CEO") since 2009. Id. ¶¶ 30, 43. Hilberto Silva is the head of Odebrecht's Division of Structured Operations. Id. ¶ 30.

Defendant Construtora Norberto Odebrecht, S.A. ("CNO") is a subsidiary of Odebrecht. Id. ¶ 15. Prior to and during 2009, Marcelo Odebrecht served as CNO's CEO. Id. ¶ 43. CNO primarily handles large-scale infrastructure construction projects, including highways, railways, bridges, tunnels, airports, and power plants. Id. ¶¶ 1, 15. It is the largest engineering and construction firm in Latin America, and among the largest globally. Id. ¶ 31. CNO is Brazil's largest exporter of services and the world's fifteenth largest "international contractor." Id. ¶ 32. With its roots in Brazil, CNO has branched out into other countries. Id. Its international revenues increased from 30% in 1992 to 54.3% in 2012. Id.

Defendant Odebrecht Engenharia e Construção S.A. ("OEC") is also a subsidiary of Odebrecht and the parent company of CNO. Id. ¶ 16.

Defendant Odebrecht Finance, Ltd. ("Odebrecht Finance") is a wholly owned subsidiary of Odebrecht and incorporated under the laws of the Cayman Islands. Id. ¶ 17. As of March 31, 2012, the corporation had a net capital deficit of $386,659. Id. ¶ 34. Odebrecht Finance has no "legitimate assets." Id. ¶ 35. Rather, its only listed assets are long-term receivables from Odebrecht and other "Odebrecht-related entities of questionable solvency." Id. According to Plaintiffs, Odebrecht and CNO have treated Odebrecht Finance as "their own piggy-bank, sweeping every dime out of the company in exchange for only a small number of utterly worthless 'receivables.' " Id. ¶ 36. Plaintiffs allege on information and belief that Odebrecht Finance has been insolvent since its incorporation. Id. ¶ 34.

Odebrecht Finance is a shell company and was organized for the "sole purpose" of raising investment funds for CNO through the issuance of bonds. Id. ¶¶ 17, 33. From 2010 through 2014, the company issued billions of dollars in notes, all of which were guaranteed by CNO. Id. ¶ 37. Between May 6, 2013 and March 31, 2015, Plaintiffs purchased significant quantities of two bonds issued by Odebrecht Finance: (1) 7.125% Notes due on June 26, 2042 (the "7.125% Notes"), and (2) 7.50% Perpetual Notes (the "7.50% Notes"). Id. ¶¶ 24-26. Each of the Notes was "unconditionally and irrevocably guaranteed" by CNO. Id. ¶ 24. Odebrecht Finance immediately conveyed all of the proceeds from sales of the notes to CNO and Odebrecht without receiving anything of equivalent value in return. Id. ¶ 39. Those proceeds were used for CNO's "general corporate purposes" and as additional equity investments in other Odebrecht subsidiaries. Id. ¶ 36.

B. Defendants' Alleged Bribery and Kickback Scheme

Between 2001 and 2016, CNO and Odebrecht paid at least $800 million in bribes to government officials in Brazil and at least a dozen other countries. Id. ¶ 40. These bribes were paid "in order to influence the award of more than 100 large construction contracts to CNO." Id. In furtherance of this scheme, Defendants established the Division of Structured Operations (the "Division") as a "standalone division" of Odebrecht in 2006. Id. ¶ 41. The Division had one purpose: to act as a "bribe department," making "illicit payments" to government officials in exchange for public contracts for CNO. Id. ¶ 42. From 2006 to 2009, Marcelo Odebrecht approved the Division's payments. Id. ¶ 43. After Marcelo became the CEO of Odebrecht in 2009, Hilberto Silva became the head of the Division. Id. Silva reported directly to Marcelo, providing Marcelo with periodic updates of the bribes paid by the Division. Id.

Of the $788 million that was paid by the Division in bribes from 2001 through 2016, $349 million was paid to Brazilian officials and political parties. Id. ¶¶ 49-50. The Division paid, for example, $20 million to Guido Mantega, Brazil's former Finance Minister, and other officials to secure a $184 million transportation project for CNO. Id. ¶ 51. The Division also paid $9.7 million to Paulo Roberto Costa, a Brazilian legislator, in exchange for a $142 million public construction contract for CNO. Id. ¶ 52. In all, Defendants received over $1.9 billion in benefits from the contracts secured by the bribes to Brazilian officials. Id. ¶ 50. The Division also paid approximately $439 million to officials and political parties outside of Brazil. Id. ¶ 53. Defendants obtained contracts valued in excess of $1.4 billion as a result. Id. Overall, Defendants benefited in excess of $3.3 billion from contracts secured by bribes between 2001 and 2016. Id. ¶ 49.

The money used to make the bribes was obtained through various "off the books" means, including: (1) collection of standing overhead charges from clients; (2) attributing overcharges and fees to service providers and subcontractors as legitimate without including them in project budgets; (3) undeclared retainers and success fees for the purchase of company assets; and (4)

self-insurance and self-guarantee transactions. Id. ¶ 46. After the funds were generated, they were not recorded. Id. Rather, the funds were sent by the Division to a series of offshore entities that were not identified as related entities in CNO or Odebrecht's financial statements. Id.

The Division laundered the bribe payments through a network of banks located in countries with "strict bank-secrecy laws." Id. ¶ 48. The Division also funneled the money through various "dummy corporations" that transacted with "friendly" banks. Id. ¶ 54. By 2010, one of the banks used by the Division located in Antigua collapsed. Id. ¶ 55. Division executives Fernando Migliaccio and Luiz Eduardo Soares then purchased the majority interest in another Antigua bank, and that bank began to charge Odebrecht a 2% "commission" to launder the bribe payments. Id. ¶¶ 43, 55.

The Division did not record the bribe payments in CNO and Odebrecht's accounting records. Id. ¶ 44. Rather, the Division used two "shadow" systems to track the payments. Id. The "MyWebDay" system was used to generate payment requests, process payments, and create spreadsheets documenting the payments. Id. The "Drousys" system was used by Division employees to communicate with each other and "other co-conspirators" using secure email and instant messaging. Id. Both of these systems were accessible only by Division members. Id. Neither CNO nor Odebrecht reported the bribe payments in their reported financial results, and the payments were also concealed from external auditors. Id. ¶ 45.

In 2014, Brazilian law enforcement began investigating bribes accepted by executives of a state-owned oil company, Petrobras, in an operation coined Lavo Jato, or "Operation Car Wash." Id. ¶¶ 6, 56, 81. Initially, Odebrecht and CNO were not targets of that investigation. Id. ¶ 56. After the investigation began, Defendants concealed and destroyed evidence of their own bribe payments. Id. ¶ 57. In addition, Odebrecht bribed Antiguan Prime Minister Gaston Browne so that he would prevent Brazilian authorities from obtaining subpoenaed documents from Antigua banks through which the Division had laundered bribe money. Id. ¶ 60.

By the time of Operation Car Wash, the Division ran a "substantial portion" of the bribery scheme in the United States. Id. ¶ 58. In light of the investigation, Marcelo Odebrecht told Silva to flee Brazil and to continue the Division's work outside of the grip of Brazilian authorities. Id. Specifically, Marcelo told Silva, "I think you all should go abroad to work because here, when you use the phone you will be scared, when you use the computer you will be afraid. You will be afraid your offices will be bugged ... [a]nd you will fall asleep wondering whether the next day the police will come for you." Id. (alterations in original). Silva stayed in Brazil, but Migliaccio and Soares moved to Miami and "got cover jobs" working in Odebrecht's office there. Id. By 2015, due to Silva's medical issues, Migliaccio and Soares were operating the Division. Id. ¶ 59. Migliaccio and Soares conducted some business for the Division in the Dominican Republic, but a majority of the bribe-related work was conducted from Florida. Id.

According to the second amended complaint, it was not until June 19, 2015, when Marcelo Odebrecht was arrested, that Odebrecht and CNO were implicated in the scandal. Id. ¶ 82. Silva, Migliaccio, and Soares were also arrested by Brazilian law enforcement. Id. ¶ 63. They, along with Marcelo, all agreed to cooperate with prosecutors in exchange for leniency. Id.

C. CNO's GAAP Violations

Plaintiffs allege that many of Defendants' public statements were rendered false or misleading as a result of the undisclosed bribery scheme. Among those statements are CNO's quarterly and annual financial statements. According to Plaintiffs, those statements were false and misleading because they did not comply with Brazilian generally accepted accounting principles ("GAAP"). Id. ¶ 65. Specifically, Plaintiffs allege four ways in which CNO's financial statements violated Brazilian GAAP.

First, Plaintiffs allege that the 2009 through 2015 financial statements failed to provide for "the clearly foreseeable and estimable financial obligations arising from [CNO's] ongoing illegal bribery scheme." Id. ¶ 68. According to Plaintiffs, the illicit bribery scheme carried with it "a knowable and estimable range of possible civil, criminal and financial penalties and consequences." Id. ¶ 70. Paragraph 37 of the Conceptual Structure for the Preparation and Presentation of the Financial Statements promulgated by the Brazilian Accounting Standards Committee (Comitê de Pronunciamentos Contábeis or "CPC") recognizes that certain liabilities may only be measured "using a high degree of estimation." Id. ¶ 69. A "provision" must be identified as a charge against income under the Brazilian Technical Pronouncement CPC 25 Provisions, Contingent Liabilities and Assets when "(1) it is probable that a present obligation for a past event or conduct exists; (2) which will more likely than not require a future disbursement to settle the obligation; and (3) a reasonable estimate of the required disbursement to settle the obligation can be made after weighing all possible outcomes or ranges of outcomes." Id. Because the potential financial consequences of the bribery scheme were estimable, Plaintiffs allege that CNO's failure to accrue a provision for those estimated consequences and to simultaneously charge the estimate against income violated CPC 25. Id. ¶ 70.

Second, and related to the first, Plaintiffs allege that CNO failed to disclose the illegal bribery scheme and its "clearly foreseeable and estimable expected financial costs" in the notes to the company's publicly filed financial statements. Id. ¶ 71. Brazilian GAAP, and CPC 25 in particular, requires a separate disclosure in the financial statement notes that includes a "(1) brief description of the nature of the provision or contingent liability, including an expected timeline during which disbursement will be made to settle the obligation; and (2) an indication of any uncertainties related to the value or amount of settlement of the liability, including the main assumptions adopted related to future events." Id. ¶ 72. This disclosure in the notes is required even if a company does not accrue a provision because there is no present obligation or it is impossible to create a sufficiently reliable estimate of the cost of such a liability. Id. ¶ 73. Because CNO failed to disclose any information related to the bribery scheme, Plaintiffs allege that CNO has separately violated this provision of CPC 25.

Third, Plaintiffs allege that CNO's financial statements violated Brazilian GAAP because they failed to disclose the revenues from foreign and domestic contracts that the company obtained as a result of the bribes that it paid separately from CNO's other contract revenue. Id. ¶ 74. CPC 00 (Conceptual Structure for the Preparation and Presentation of the Financial Statements ) explains that common practice is to separately disclose different types of revenue "to assist investors in assessing the ability of a business to generate cash in the future and distinguish revenues that arise in the normal course of the entity's business from revenues stemming from contingent activities that may not be repeated on a regular basis." Id. ¶ 75. Plaintiffs allege that investors and others would not "necessarily" have expected contract revenue obtained by fraud to be a reliable indicator of future revenue. Id. ¶ 76.

Finally, Plaintiffs allege that CNO's financial statements were prepared in violation of Brazilian GAAP because they failed to disclose the monies that were paid in bribes. Id. ¶ 77. CPC 00 (Basic Conceptual Pronouncement) and CPC 17 (Construction Contracts) require that the books and financial records of a company reflect the "assets and expenses directly associated with generating particular contract revenue." Id. Those assets and expenses must also be reflected in a company's income statement in the same period as the revenue. Id. By concealing the costs of the CNO contracts (the bribes), Plaintiffs allege, CNO failed to comply with GAAP. Id. Plaintiffs further allege that CNO was required to disclose the bribe funds in the notes to its financial statements, yet failed to do so. Id. ¶ 78.

D. Other False and Misleading Statements

Plaintiffs also allege that Defendants misrepresented CNO's financial status from March 23, 2011 through May 6, 2016 (the "Relevant Period"). Id. ¶ 83. The allegedly false and misleading statements were contained in offering memoranda, public statements including press releases, and statements made directly to Plaintiffs. Id.

1. Offering Memoranda

Odebrecht Finance initially sold its Notes in private offerings pursuant to various offering memoranda. Id. ¶ 84. Those offering memoranda disclosed CNO's financial condition, including that a majority of the company's revenues were from large-scale engineering and construction projects completed for governmental and quasi-governmental entities. Id. According to the second amended complaint, Odebrecht Finance was responsible for all of the statements in the offering memoranda as the issuer of the Notes. Id. ¶¶ 100, 113, 129. Plaintiffs allege that various statements in the offering memoranda were false or misleading, as follows.

a. 7.50% Notes Offering Memorandum

The offering memorandum issued on November 15, 2011 in connection with the Odebrecht Finance 7.50% Notes ("7.50% Notes OM") included the following financial information for CNO: CNO's unaudited financial statements for the six-month periods ended June 30, 2010 and June 30, 2011; CNO's audited financial statements for the years ended December 31, 2009 and December 31, 2010; and CNO's audited financial statements for the years ended December 31, 2009 and December 31, 2008. Id. ¶¶ 85-86. According to the second amended complaint, those financial results were false and misleading because they violated Brazilian GAAP, as discussed earlier in Section I.C. Id. ¶ 86. The 7.50% Notes OM falsely stated that the reported financial information was prepared "in accordance with Brazilian GAAP." Id. ¶ 87.

Plaintiffs further allege that the 7.50% Notes OM was materially false and misleading because it failed to disclose that the reported financial results were "unsustainable" and the product of a "massive and illegal bribery scheme." Id. ¶ 86.

According to the second amended complaint, the 7.50% Notes OM contained additional false and misleading statements. The OM's disclosure of CNO's "competitive strengths" is alleged to have been false and misleading because the financial figures were overstated, as described earlier, and the disclosure concealed the existence and scope of the bribery scheme and the attendant risks. Id. ¶ 89. That disclosure read as follows:

Our Competitive Strengths

We believe that our main competitive strengths include the following:

Leadership Position

We are Latin America's largest engineering and construction company as measured by our gross revenues in 2009, according to ENR. Our geographic diversification, extensive operations and leading market share in Brazil enable us to capitalize on additional business opportunities as they arise.

* * *

Financial Strength

We believe that our financial performance has been consistent, enabling us to rely primarily on our cash flow from operations to grow our business. Our EBITDA margins (which we define as EBITDA as a percentage of our net service revenues) for the six-month period ended June 30, 2010, 2009, 2008, and 2007 were 10.8%, 9.7%, 14.0%, and 10.3%, respectively. Our cash and cash equivalents and financial investments totaled R $2,513.9 million (U.S. $1,395.4 million) and R $3,135.0 million (U.S. $1,740.2 million) as of June 30, 2010 and as of December 31, 2009, respectively. We are focused on maintaining the relatively strong financial position and liquidity we have as compared to many of our competitors.

Id. ¶ 88.

The 7.50% Notes OM also allegedly made false and misleading statements about CNO's "diversification." Id. ¶ 90. Those statements read:

Diversification

We have expanded our business internationally in order to broaden our client base and diversify the risks inherent in an excessive reliance on the Brazilian market, as well as to increase the share of our revenues denominated in dollars and other currencies. As of June 30, 2010, we had 157 ongoing projects: Brazil (70); Angola (33); Venezuela (12); Peru (10); Panama (8); the Dominican Republic (5); the United States (5); Portugal (3); Argentina (3); Libya (2); Mozambique (2); Colombia (2); and other (2).

The percentage of our gross service revenues derived from international projects increased from approximately 30% in 1992 to 57.9% in the six-month period ended June 30, 2010. We believe our diversification provides us with revenue growth opportunities, while reducing our exposure to one single market and related risks including political risks.

Strong and Diversified Backlog

We define backlog to include payments under contracts that we have signed for a particular project and for which an identified source of funding exists, but have not been recognized as revenue by us. As of June 30, 2010, (1) our backlog represented U.S. $21,519.6 million, or more than two years of future services based on our performance of 2009 and (2) we expect to complete approximately 20% of our total backlog by the end of 2010.

Our backlog includes a diversified portfolio of engineering and construction projects in various infrastructure sectors and different types of construction undertakings in numerous countries.

Id. The 7.50% Notes OM also described CNO's prior success in securing international contracts:

During the last five years, we have successfully secured important international projects not only in Brazil, but also in Argentina, Angola, Colombia, the Dominican Republic, Libya, Mozambique, Panama, Peru, the United States, Portugal, Venezuela, and certain countries in the Middle East. New projects awarded during the six-month period ended June 30, 2010, had a total contract amount of U.S. $2,853.8 million (plus acquisitions on existing contracts of U.S. $3,276.8 million), of which U.S. $4,633.3 million is for projects located in Brazil and U.S. $1,497.3 million is for projects located outside Brazil.

Id. ¶ 95. Plaintiffs allege that these statements were false and misleading because they failed to disclose the fact that the contracts had been secured by bribes. Id. ¶¶ 91, 96. The statements also aided in concealing the existence and scope of the bribery scheme and the attendant risks. Id. ¶¶ 91, 96.

Plaintiffs additionally allege that the 7.50% Notes OM's statement that CNO's "bid success rate for Venezuelan operations is high and reflects our selectivity in bidding for new work in Venezuela" was false and misleading in that it attributed CNO's success in Venezuela to the company's "selectivity" rather than the $98 million in illegal bribes paid to Venezuelan officials between 2006 and 2015. Id. ¶ 93-94. The OM also explained that CNO had "a large and diversified backlog in Venezuela, which currently ranks the country, together with Angola, as our two most important foreign markets in terms of future revenues." Id. ¶ 93. The statement regarding Angola's ranking is alleged to have been false and misleading because it failed to disclose that CNO's success in that country was due to more than $50 million in bribe payments to Angola officials between 2006 and 2013. Id. ¶ 94.

Other allegedly false and misleading statements in the 7.50% Notes OM portrayed CNO's successes as the result of CNO's "experience," "reputation," "technological capabilities," or other "legitimate" factors. Id. ¶ 98. Specifically, the OM stated:

We are the largest engineering and construction company in Latin America as measured by 2009 revenues. Most of our ongoing construction projects were awarded through a competitive bidding process. While price generally is the most important factor that determines whether we will be awarded a contract through competitive bidding procedures, other important factors in competitive bidding procedures include health, safety and environmental protection records, service quality, technological capacity and performance, as well as reputation, experience, access to funding sources and client relationships.

* * *

... we believe that we have a competitive advantage with respect to other Brazilian engineering and construction companies as a result of our experience, reputation, capacity, efficiency, trained personnel, size, financial resources and technological capabilities.

* * *

We believe that we are able to make competitive bids in Brazil and internationally for three principal reasons. First, our engineering capabilities and experience enable us to accurately assess the nature and extent of the work required to complete our projects, to create efficient engineering plans and, on occasion, to offer most costeffective alternatives to proposed plans of governmental authorities in invitations for bids. Second, our decentralized management approach has generally allowed us to efficiently manage our projects. Third, our projects are often eligible for funding from the Brazilian government for service exports and from multilateral financial institutions.

Id. ¶ 97.

In addition to the false and misleading statements regarding CNO's financials, Plaintiffs allege that the 7.50% Notes OM contained false and misleading statements regarding Odebrecht Finance's condition. Id. ¶ 100. Odebrecht Finance disclosed in its financial statements that it was insolvent and "entirely dependent" on OEC, CNO, and Odebrecht for funding. Id. However, Odebrecht Finance neglected to disclose that the prospect that it would repay the Notes was "materially diminished" because the other Defendants on which Odebrecht Finance was dependent were subject to "serious undisclosed risks" as a result of the bribery scheme. Id.

Plaintiffs relied on these statements in purchasing the 7.50% Notes. Id. ¶ 99.

b. 7.125% Notes Offering Memorandum

The 7.125% Notes were sold pursuant to an offering memorandum issued on July 4, 2012 (the "7.125% Notes OM"). Id. ¶ 101. That offering memorandum contained CNO's audited financial statements for the years ending December 31, 2010 and 2011, and its unaudited financial statements for the first quarter of 2012. Id. ¶ 102. Plaintiffs allege that the 7.125% Notes OM contained many of the same false and misleading statements found in the 7.50% Notes OM. The 7.125% Notes OM's reported net income and revenues for CNO for 2011 and the first quarter of 2012 were false and misleading because, like the 7.50% Notes OM, they violated Brazilian GAAP, as discussed in Section I.C. Id. Plaintiffs also allege that, like the 7.50% Notes OM, the 7.125% Notes OM failed to disclose that CNO's financial results "were unsustainable" and the product of the bribery scheme. Id. The 7.125% Notes OM was also false and misleading because it stated that the financial figures were prepared "in accordance with Brazilian GAAP," when, in fact, the figures were prepared in violation of those principles. Id. ¶ 103.

The 7.125% Notes OM, like the 7.50% Notes OM, made various allegedly false and misleading disclosures regarding CNO's "competitive strengths," its successes in obtaining international contracts, and the reasons for the company's success. Id. ¶¶ 104-05, 107-12. The 7.125% Notes OM stated:

Leadership Position

We are Latin America's largest engineering and construction company as measured by our gross revenues in 2010, according to ENR. Our geographic diversification, extensive operations and leading market share in Brazil enable us to capitalize on additional business opportunities as they arise.

* * *

Financial Strength

We believe that our financial performance has been consistent, enabling us to rely primarily on our cash flow from operations to invest in our business. Our EBITDA margins (which we define as EBITDA as a percentage of our net service revenues) for the three-month periods ended March 31, 2012 and 2011 were 10.2% and 9.9%, respectively, and for the years ended December 31, 2011 and 2010 were 10.7% and 11.1%, respectively. The sum of our cash and cash equivalents and financial investments totaled R $5,006.0 million (U.S. $2,747.4 million) at March 31, 2012, compared to R $6,831.1 million (U.S. $3,749.0 million) and R $4,717.1 million (U.S. $2,588.8 million) at December 31, 2011 and 2010, respectively. We are focused on maintaining a relatively strong financial position and liquidity we have as compared to many of our competitors.

Diversification We have expanded our business internationally in order to broaden our client base and diversify the risks inherent to a strong exposure to the Brazilian market, as well as to increase the share of our revenues denominated in dollars and other currencies. At March 31, 2012, we had 185 ongoing projects: Brazil (80); Angola (33); Venezuela (18); Peru (9); the Dominican Republic (10); Panama (7); Argentina (6); the United States (7); Portugal (1); Mozambique (4); Colombia (2); Mexico (2); Ecuador (2) and other (4).

The percentage of our gross service revenues derived from international projects has increased from approximately 30.0% in 1992 to 54.5% in the three-month period ended March 31, 2012. We believe our diversification provides us with revenue growth opportunities, while reducing our exposure to one single market and related risks, including political risks.

Strong and Diversified Backlog

We define backlog to include payments under contracts that we have signed for a particular project and for which an identified source of funding exists, but have not been recognized as revenue by us. At March 31, 2012, our backlog represented U.S. $33.7 billion, or more than two and a half years of future services based on our performance of 2011. We expect to complete approximately 20% to 25% of our total backlog by the end of 2012.

Our backlog includes a diversified portfolio of engineering and construction projects in various infrastructure sectors and different types of construction undertakings in numerous countries.

Id. ¶ 104. These statements were allegedly false because they overstated the financial figures and failed to disclose the bribery scheme. Id. ¶ 105.

With respect to CNO's success in contracting, the 7.125% Notes OM stated:

Our bid success rate for Venezuelan operations is high and reflects our selectivity in bidding for new work in Venezuela. We have a large and diversified backlog in Venezuela, which currently ranks the country, together with Angola, as our two most important foreign markets in terms of future revenues.

Id. ¶ 107. As with the 7.50% Notes OM, this representation was allegedly false and misleading because it attributed CNO's successful bidding to the company's "selectivity" rather than the bribery scheme. Id. ¶ 108. The statement also omitted the bribes paid to Angolan officials. Id.

Additionally, the 7.125% Notes OM described CNO's other international success:

During the last five years, we have successfully secured important projects not only in Brazil, but also in Argentina, Angola, Colombia, the Dominican Republic, Mozambique, Panama, Peru, the United States, Portugal, Venezuela, and certain countries in the Middle East. New projects awarded during the three-month period ended March 31, 2012 had a total contract amount of U.S. $2,024.8 million, of which U.S. $212.1 million is for projects located in Brazil and U.S. $1,812.7 million is for projects located outside Brazil. These new projects include: (1) Cibao Sur, Dominican Republic (U.S. $298.8 million); (2) the Ecovias Santiago road, Dominican Republic (U.S. $295.6 million); (3) Gas Anaco, Venezuela (U.S. $316.6 million); (4) the São Paulo Metro Line V, Brazil (U.S. $212.1 million); and (5) the Morar Feliz Project, Brazil (U.S. [$]45.3 million).

Id. ¶ 109. Plaintiffs allege that this statement was false and misleading because it overstated the financial information (due to violations of Brazilian GAAP) and failed to disclose that the contracts described were secured only because of the bribery scheme. Id. ¶ 110. As with the 7.50% Notes OM, the 7.125% Notes OM also misleadingly attributed CNO's successful bidding to the company's "experience," "reputation," "technological capabilities," and other "legitimate" factors rather than to the bribery scheme. Id. ¶ 112. In that respect, the OM stated:

We are the largest engineering and construction company in Latin America as measured by 2010 revenues. Most of our ongoing construction projects were awarded through a competitive bidding process. While price generally is the most important factor that determines whether we are awarded a contract through competitive bidding procedures, other important factors in competitive bidding procedures include health, safety and environmental protection records, service quality, technological capacity and performance, as well as reputation, experience, access to funding sources and client relationships.

* * *

We believe that we are able to make competitive bids in Brazil and internationally for three principal reasons: First, our engineering capabilities and experience enable us to accurately assess the nature and extent of the work required to complete our projects, to create efficient engineering plans and, on occasion, to offer more costeffective alternatives to proposed plans of governmental authorities in invitations for bids. Second, our decentralized management approach has generally allowed us to effectively manage our projects. Third, our projects are often eligible for funding from the Brazilian government for service exports and from multilateral financial institutions.

Id. ¶ 111.

Plaintiffs additionally allege that Odebrecht Finance's own financial statements in the 7.125% Notes OM were false and misleading. Id. ¶ 114. The OM explained:

The issuer's ability to make payments on the notes depends on its receipt of payments from us.

The issuer's principal business activity is to act as a financing vehicle for Odebrecht's activities and operations. The issuer has no substantial assets, and accordingly, holders of the notes must rely on our cash flow from operations to pay amounts due in connection with the notes. The ability of the issuer to make payments of principal, interest and any other amounts due on the notes is contingent on its receipt from us of amounts sufficient to make these payments, and, in turn, on our ability to make these payments. In the event that we are unable to make such payments for any reason, the issuer will not have sufficient resources to satisfy its obligations under the indenture governing the notes.

Id. ¶ 33 & n.3. The OM also stated: "To fund its activities, the Company relies on the operational structure of ODB and its operations depend on the remittance of funds from ODB and from other related parties of the Odebrecht Organization."Id. ¶ 34 & n.4. These disclosures omitted the diminished likelihood of Odebrecht Finance's repayment of the Notes due to Odebrecht Finance's total dependence on OEC, CNO, and Odebrecht, which faced "serious undisclosed risks" because of the bribery scheme. Id. ¶ 114.

Plaintiffs relied on all of these statements in purchasing the 7.125% Notes. Id. ¶ 113.

c. 4.375% Notes Offering Memorandum

In addition to the 7.50% and 7.125% Notes, Defendants sold 4.375% Notes due on April 25, 2025 pursuant to an offering memorandum dated June 3, 2013 (the "4.375% Notes OM"). Id. ¶ 115. Plaintiffs did not purchase those notes. Id. Nonetheless, Plaintiffs allege that the false statements and omissions in the 4.375% Notes OM affected the market price of the notes that Plaintiffs did purchase. Id.

As with the other offering memoranda, the 4.375% Notes OM contained CNO's financial information, including audited financial statements for years ended December 31, 2011 and December 31, 2012. Id. ¶ 116. Plaintiffs allege that those financial results were "overstated" because they violated Brazilian GAAP, as discussed earlier in Section I.C. Id. ¶¶ 116, 119. Plaintiffs also allege that the 4.375% Notes OM, like the 7.50% and 7.125% Notes OMs, omitted the fact that the financial results were "unsustainable" in light of the bribery scheme and falsely stated that CNO's financial statements were prepared "in accordance with Brazilian GAAP." Id. ¶¶ 116-17.

The 4.375% Notes OM contained disclosures regarding CNO's "competitive strengths," its diversification and backlog, and its successful bidding that were nearly identical to the disclosures made in the 7.50% and 7.125% Notes OMs. See id. ¶¶ 118-19, 121-23, 125. Plaintiffs allege that those disclosures were false and misleading because they overstated CNO's financial results, failed to disclose that the contracts were secured with bribes, and falsely attributed the company's successes to various legitimate factors rather than the illegal scheme. Id. ¶¶ 119, 122, 124, 126-28. Plaintiffs also allege that the 4.375% Notes OM contained false statements related to Odebrecht Finance's financial results because the OM failed to disclose the "materially diminished" possibility that the entity would repay the notes due to its reliance on OEC, CNO, and Odebrecht, which were subject to the risks inherent in the bribery scheme. Id. ¶ 129.

d. 5.250% Notes Offering Memorandum

Defendants also sold Odebrecht Finance 5.250% Notes pursuant to a July 15, 2014 offering memorandum (the "5.250% Notes OM"). Id. ¶ 130. That OM contained CNO's financial statements for the three-month period ended March 31, 2014 and for the year ended December 31, 2013. Id. ¶ 131. These financial results are alleged to have been false and misleading because they were prepared in violation of Brazilian GAAP, as described in Section I.C. Id. Like the other OMs, the 5.250% Notes OM was also materially misleading because it failed to disclose the unsustainability of the financial results and falsely stated that the financial statements were prepared "in accordance with Brazilian GAAP." Id. ¶¶ 131-32. The 5.250% Notes OM additionally contained statements regarding CNO's "competitive strengths," its diversification and backlog, and its successful bidding that were nearly identical to the disclosures made in the other offering memoranda. See id. ¶¶ 133, 136, 138. Those statements were false and misleading, Plaintiffs allege, because they overstated CNO's financial information, failed to disclose the bribery scheme, and falsely attributed CNO's success to legitimate factors and not to the true underlying cause-the bribery scheme. Id. ¶¶ 134, 137, 139. The 5.250% Notes OM also contained the same misleading statements in Odebrecht Finance's financial disclosures as the other offering memoranda: the OM failed to disclose the "materially diminished" possibility of repayment of the notes that was the result of Odebrecht Finance's complete dependence on OEC, CNO, and Odebrecht and, in turn, those entities' risks associated with the bribery scheme. Id. ¶ 140.

2. Statements Made in Conference Calls and Meetings

Plaintiffs allege that various false and misleading statements were made in quarterly and annual financial reports and press releases. Id. ¶ 141. Plaintiffs "received, reviewed and relied upon" those financial reports. Id. The reports were also often discussed during conference calls hosted by CNO, many of which were attended by Plaintiffs. Id.

On March 23, 2011, Odebrecht and CNO held a conference call to discuss the Odebrecht Finance Notes. Id. ¶ 142. Odebrecht's Chief Financial Officer ("CFO") at the time, Luciano Nitrini Guidolin, and CNO's CFO Jayme Fonseca participated in the call, as did Plaintiffs. Id. During the call, potential tender offers and consent fees for covenant changes for investors were discussed. Id. The next day, on March 24, 2011, Plaintiffs' representatives met with CNO employees at DoubleLine headquarters in Los Angeles, California. Id. ¶ 143. They discussed CNO's operating results and business prospects. Id. Plaintiffs allege that the "disclosures" that the CNO representatives made during that meeting were false and misleading because they failed to disclose information regarding the bribery scheme. Id.

The following year, on January 11, 2012, Plaintiffs' representatives met with CNO representatives in Cancun, Mexico at a conference hosted by Santander. Id. ¶ 144. CNO again discussed its financial results and business prospects, including the funding of "sister subsidiaries." Id. Again, the CNO representatives omitted information regarding the bribery scheme. Id.

Three years later, on March 24, 2015, Plaintiffs attended a J.P. Morgan securities conference in Miami. Id. ¶ 175. CNO gave a presentation at that conference regarding its business and operations. Id. In its presentation, CNO made no mention of the fact that its business model was based on the illegal bribery scheme. Id.

3. CNO's Financial Statements

Plaintiffs allege that CNO's reported financial statements for the year ended December 31, 2011, its Earnings Release December 2012 , its first and third quarter 2013 financial statements, its Earnings Release - September 2013 containing the third quarter 2013 financial information, annual financial statements for the year ended December 31, 2013, and its first, second, and third quarter 2014 financial statements all violated Brazilian GAAP as described in Section I.C. Id. ¶¶ 145, 148, 151, 155, 158-59, 163, 166, 170. Each of those financial statements is also alleged to have omitted any disclosure that the reported financial results were "unsustainable" and only the product of the bribery scheme. Id. ¶¶ 145, 148, 151, 155, 158-59, 163, 166, 170.

Those financial statements are also alleged to have misleadingly explained CNO's credit ratings. The notes to CNO's December 31, 2011 annual financial statements stated:

The Company's credit has been monitored and analyzed by the main credit rating agencies for many years and, since its first rating, the Company has obtained consecutive upgrades on both the local and global scales.

Id. ¶¶ 146, 156, 164, 171. The notes to CNO's Earnings Release December 2012 reported the following:

On May 23, 2012, Standard & Poor's raised CNO's Global and National ratings to investment grade, at BBB- and brAAA respectively. With this upgrade, CNO achieve [sic] the triple-investment grade, across the three main rating agencies.

Id. ¶ 149. The notes to CNO's first quarter 2013 financial statements described the company's credit ratings as follows:

In December 2009, the rating agency Moody's started to cover the Company, and assigned a Baa3 investment grade rating on the global scale and Aa1.br on the Brazilian national scale.

In October 2010, the rating agency Fitch Ratings assigned a BBB-investment grade rating on the global scale and AA+ on the Brazilian national scale.

In June 2011, the rating agency Standard & Poor's assigned a BB+ rating on the global scale and br AA+ on the national scale.

Id. ¶ 152. The notes to CNO's third quarter 2013 financial statements similarly stated:

In December 2009, the rating agency Moody's started to cover the Company, and assigned a Baa3 investment grade rating on the global scale and an Aa1.br rating on the Brazilian national scale. In May 2012, the rating agency Standard & Poor's assigned a BBB- rating on the global scale and a br AAA rating on the national scale. In September 2013, the rating agency Fitch Ratings upgraded the Company's rating to BBB on the global scale and AAA on the Brazilian national scale.

Id. ¶ 156. The notes to CNO's annual financial statements for the year ended December 31, 2013, as well as a contemporaneously disseminated presentation entitled Earnings Release - December 2013 , described the company's credit ratings in nearly identical language. Id. ¶¶ 160, 162.

CNO's financial statements for 2014 contained similar disclosures. The notes to the financial statements contained in CNO's first quarter 2014 Earnings Release explained:

In December 2009, the rating agency Moody's started to cover the Company, and assigned a Baa3 investment grade rating on the global scale and Aa1.br on the Brazilian national scale. In May 2012, the rating agency Standard & Poor's assigned a BBB- rating on the global scale and br AAA on the national scale. In September 2013, the rating agency Fitch Ratings assigned a BBB investment grade rating on the global scale and AAA on the Brazilian national scale. In May 2014, the rating agency Standard & Poor's upgraded Company's Credit Risk from BBB- to BBB on the global scale, maintaining the br AAA on the national scale.

Id. ¶ 163-64. The notes to CNO's second quarter 2014 financial statements, as well as a contemporaneously disseminated report entitled Earnings Release - 2nd Quarter 2014 , contained a nearly identical disclosure. Id. ¶¶ 166-67, 169. And the notes to CNO's third quarter 2014 financial statements, dated November 13, 2014, reported the following:

In December 2009, the rating agency Moody's started to cover the Company, and assigned a Baa3 investment grade rating on the global scale and Aa1.br on the Brazilian national scale.

In October 2010, the rating agency Fitch Ratings upgraded the Company's ratings to BBB- investment grade on the global scale and to AA+ on the Brazilian national scale. In September 2013, the rating agency upgraded the Company's rating to BBB on the global scale and AAA on the Brazilian national scale.

In May 2012, the rating agency Standard & Poor's assigned a BBBrating on the global scale and br AAA on the national scale. In May 2014, the rating agency Standard & Poor's upgraded the Company's rating to BBB investment grade on the global scale and assigning a stable outlook.

Id. ¶¶ 170-71.

Plaintiffs allege that all of these statements regarding CNO's credit ratings were false and misleading because they failed to disclose that the credit ratings were achieved "only by concealing" the bribery scheme. Id. ¶¶ 147, 150, 153, 157, 161, 163, 165, 168, 169, 172. Had the bribery scheme been disclosed, the second amended complaint predicts, CNO would not have obtained its favorable credit ratings. Id. In fact, CNO's credit ratings "would have been downgraded significantly." Id.

Following the dissemination of the third quarter 2014 financial statements, CNO hosted a conference call with investors and analysts to discuss the first quarter results. Id. ¶ 173. In connection with that call, CNO released its Earnings Release 3rd Quarter 2014 , which was referenced during the call and which contained the same financial information and credit rating disclosures as the 2013 annual financial statements. Id. Plaintiffs allege that the Earnings Release was false and misleading for the same reasons as the third quarter financial statements. Id. The Earnings Release also falsely stated that the "Petrobras investigation has not impacted CNO, despite of [sic ] the negative watch given by Fitch to all heavy construction companies." Id. However, the second amended complaint alleges, to the contrary, that Odebrecht and CNO "were embroiled" in that investigation and "were certain to be charged criminally or civilly by Brazilian and a host of other governments." Id. ¶ 174.

4. Odebrecht's 2014 Annual Report

Plaintiffs allege that Odebrecht's annual report for 2014 contained various false and misleading statements. First, Plaintiffs allege that the report failed to disclose the bribery scheme and instead falsely described Odebrecht as "being built on a foundation of public service" when it stated:

For 70 years, the ethos of service has been the decisive hallmark that sets the Odebrecht Group apart. It is impossible to translate that ethos into words, but it can be easily identified in the conduct of people who are always willing to perceive, understand, and meet the needs of others, whether they are a client, a co-worker or anyone linked to their work or personal lives.

Identifying and bringing in people endowed with that constant and steadfast desire to serve others has been Odebrecht's main drive for seven decades. Thanks to them, things became simple, and everything else ensures naturally:

the client's satisfaction, support for national development, the generation of social wealth, and the Group's survival, growth, and perpetuity.

Odebrecht's history is the story of people with the ethos of service. People who apply it on a daily basis, no matter what. It is in their blood, so for them, any time is a good time for serving others. For them, service is an ongoing commitment.

Id. ¶ 176.

Second, Plaintiffs allege that the annual report's statements regarding Odebrecht's Code of Conduct were false and misleading. Id. ¶ 180. The annual report stated:

Code of Conduct

The Odebrecht Group's Code of Conduct contains concepts and guidelines in addition to TEO that reflect developments in global legislation. Therefore, it is a Group policy that must be adhered to in a disciplined manner by all Odebrecht Members. It particularly guides their external relations, as well as applying to the entire value chain in all of the Businesses, geographic regions and societies in which we are present.

Id. ¶ 177. Section 5 of the Code of Conduct referenced in the annual report provides:

All Team Members of the Organization are prohibited from:

• financing, funding or in any way sponsoring the practice of illegal acts;

• using any person as an intermediary to disguise or hide his or her identity and real interest in order to practice illegal acts;

• offering, promising, granting, authorizing, accepting or receiving, either directly or indirectly, any type of benefit, payment, gift or form of entertainment that:

• conflicts with the Organization's Policies or guidelines; or

• may be interpreted as conferring some type of inappropriate advantage, tip, bribe or payment in violation of any law, including inappropriate and/or illegal payments to any individual, whether associated with a public, private or nonprofit entity; or

• violates any law or regulation to which an Organization Company is subject.

Id. ¶ 178. The Code of Conduct specifically prohibits bribery by providing that "[i]t is prohibited to offer gifts or benefits, including trips, to public officials or private individuals or their family members with the intention of improperly influencing or rewarding a decision." Id. ¶ 179. The annual report's statement regarding the Odebrecht Code of Conduct is alleged to have been false and misleading when made because Odebrecht and its senior executives, including Marcelo Odebrecht, were "well aware" of the bribery scheme. Id. ¶ 180.

Plaintiffs also allege that, despite the annual report's statement that all Odebrecht employees are required to adhere to the Code of Conduct, Odebrecht and its senior management were not only aware that the Division was operating a "shadow accounting system" to conceal the illegal bribes, but Odebrecht's CEO, Marcelo, established the scheme and oversaw the Division. Id. ¶ 182. This directly violated another provision of the company's Code of Conduct regarding accounting records. Id. That provision states:

The reliability and transparency of the accounting practiced by the Companies at the Organization are considered crucial.

Commonly accepted legislation, standards and accounting principles should be rigorously observed in order to guarantee consistent records and reports that will permit the disclosure and evaluation of the Company's operations and results.

Id. ¶ 181.

Section 11 of the Code of Conduct further provides, "In their business actions, the Organization's Team Members should respect and obey the laws and regulations of each country or region in which they operate." Id. ¶ 183. Odebrecht and its senior management's participation in the bribery scheme violated Section 11 because the scheme was unlawful in all of the countries in which Odebrecht and CNO operated. Id. ¶ 184.

Finally, Plaintiffs allege that the 2014 annual report's summary of Odebrecht and CNO's financial results was false and misleading. Id. ¶ 185. CNO's reported gross revenue exceeded $14 billion and its reported EBITDA was $1.35 billion. Id. Those numbers were false and misleading because they (1) failed to recognize the hundreds of millions of dollars paid in bribes as expenses required to secure the contracts that generated the reported revenues, in violation of GAAP; (2) included the illegally obtained revenues in violation of GAAP; and (3) failed to disclose the unsustainability of the reported results or that the results were the product of the illegal bribery scheme. Id.

E. The Bribery Scheme is First Revealed

On June 19, 2015, Brazilian police arrested Marcelo Odebrecht. Id. ¶ 187. Reuters reported the arrest in an article that same day entitled "Odebrecht Bonds Spiral South on Executive Arrest." Id. That article explained:

Multi-point price drops in bonds issued by Odebrecht dominated LatAm credit markets' attention on Friday following news that the Brazilian construction firm's CEO had been arrested.

The move marked the first time an Odebrecht executive had been detained by the police in connection with the kick-back scandal embroiling state-owned oil company Petrobras and linked the firm close to the so-called "Car Wash" scandal.

The company's bonds were marked down about 10 points immediately following the news, but have since come off their lows to trade some four points weaker on the day, traders said.

Id. The market price of the Odebrecht Finance Notes fell dramatically that day as a result of the disclosure. Id. ¶ 189. The value of the 7.125% Notes fell from a close of $86.25 on June 18, 2015 to $80.50 at close on the day of Marcelo's arrest-a 6.7% loss. Id. The value of the 7.50% Notes likewise fell, from a close of $87.47 on the previous day to $78.75-a 10.0% loss. Id. ¶ 189 n.38.

The day after Marcelo's arrest, the New York Times reported:

Brazilian police on Friday arrested one of the country's richest men, Marcelo Odebrecht, the fallout broadens in an investigation into corruption at the state-run oil giant Petrobras.

The investigation, which is looking into whether subcontractors may have colluded with top Petrobras executives to overbill the company and pay bribes, has touched the highest levels of government and business.

In the latest development, Mr. Odebrecht, the billionaire chief executive of the Odebrecht conglomerate, was arrested with three other senior company executives and the chief executive of Andrade Gutierrez, another major construction conglomerate. The federal prosecutor accused the executives of knowing that their companies paid bribes to politicians that added up to 710 million reais ($230 million).

"We have material proof that they knew about the practice of overbilling contracts with Petrobras and they participated directly in the division of contracts with the cartel," a police investigator, Igor Romário de Paula, said in a news conference Friday.

Id. ¶ 188.

Two days later, on June 22, 2015, Odebrecht issued a press release to "express its indignation" at Marcelo's arrest, which it claimed was "illegal." Id. ¶ 190. The press release stated:

The Odebrecht Group, for respecting for its Clients, Partners, Investors, Financial Institutions, Suppliers, Users of its Services, Friends and Team Members, hereby expresses its indignation at the arrest of five of its executives and the search and seizure warrants served last Friday (June 19) at some of our subsidiaries as part of the 14th stage of Operation Lava Jato ("Car Wash"; a Brazilian corruption scandal involving alleged payoffs and the state-owned oil giant Petrobras).

The court order approving the arrest of our executives and the search and seizure warrants demonstrates that, since the beginning of Lava Jato over a year ago, the Federal Police have not presented, as alleged in the court order, any new evidence that justifies the forceful measures taken, which were completely unnecessary and for that very reason, illegal.

Id. The press release further explained:

[T]he Odebrecht Group never hindered the investigations in any way. To the contrary, its executives have always made themselves available to authorities to provide any clarifications. In fact, four of the five arrested executives had traveled to the headquarters of the Federal Police in Brasília and provided testimony in the course of the Lava Jato investigations conducted by the Superior Court of Justice and the Federal Supreme Court. They have also furnished all requested documents and formally offered to testify before the Federal Court in the State of Paraná-testimony that they were never invited to provide, but which certainly would have clarified all of the points raised.

Id. ¶ 192.

According to the second amended complaint, the press release statements were false and misleading. Contrary to the press release's suggestion, Defendants were well aware of Marcelo Odebrecht's role in the bribery scheme and that his arrest was in fact justified. Id. ¶ 191. Further, the press release's statement that Odebrecht "never hindered the investigations in any way" was also false; Odebrecht had "done everything that it could to impede the investigations." Id. ¶ 193. For example, Marcelo Odebrecht had directed employees to delete records that could reveal illegal activities. Id. Odebrecht had also paid an Antigua government official's representative millions of dollars to prevent incriminating documents from being turned over to international authorities. Id. Odebrecht had also intentionally destroyed encryption keys that were needed to access evidence stored on a "secret email system." Id.

The press release was effective: the market price of the Odebrecht Finance Notes rose "significantly." Id. ¶ 194. The value of the 7.125% Notes increased from $79.77 on June 22, 2015 to $80.97 the following day and to $81.85 on June 24, 2015-a two-day gain of 2.6%. Id. Similarly, the 7.50% Notes increased in value from $80.50 on June 22, 2015 to $82.50 on June 23, 2015 and $83.67 on June 24, 2015-a two-day gain of 3.9%. Id. ¶ 194 n.39.

Odebrecht had not entirely escaped hot waters, however. On June 24, 2015, after the market had closed, Reuters reported the following:

Brazilian police said on Wednesday they intercepted a note from the jailed chief executive of Odebrecht SA to his lawyers asking to "destroy email," after he became the highest-profile executive arrested in Brazil's largest ever corruption investigation.

The handwritten note, reproduced by Federal Police and posted in court documents online, says "destroy email drilling rigs."

Marcelo Odebrecht, head of Brazil's largest engineering and construction conglomerate, was arrested Friday in a sweeping investigation into a kickback scheme at the state-run oil comp