b'With respect to alleged misstatements in the financialPlaintiffs alleged that the bribery scheme became disclosures, Plaintiff identified numerous violations ofknown in 2018 as part of the wide-ranging corruption Brazilian GAAP, which the court examined in detail.allegations in the so-called Notebooks Case. When Ultimately, the court found that Plaintiff failed toasked about the corruption allegations, the CEO plead sufficient facts to find any of the alleged GAAPacknowledged that the companys involvement in the violations actionable. The court relied heavily on twoscheme but denied that he knew about the bribery previous decisions arising out of Odebrecht briberypayments at the time. On November 27, 2018, it was scandalDoubleLine Capital LP v. Odebrecht Finance,widely reported that the CEO had been charged in Ltd., 323 F. Supp. 3d 393 (S.D.N.Y. 2018) and DoublelineArgentina with bribery and graft. This news caused Capital LP v. Construtora Norberto Odebrecht S.A., 413Tenaris stock price to fall 10% in one day. In December F. Supp. 3d 187 (S.D.N.Y. 2019)to instruct as to what2018, when Argentine investigators requested that the constitutes sufficient facts in this context.CEO be detained, Tenaris stock fell another 5%. By contrast, the allegations concerning NorbertosPlaintiffs brought securities fraud claims under Sections competitive bidding process passed muster. The10(b) and 20(a) of the Exchange Act, alleging that court deemed these statements were made as toTenaris made false and misleading statements in five specific risks concerning international competition andannual SEC Form 20-Fs that Tenaris filed during the accordingly could not be dismissed as mere puffery.May 1, 2014 through December 5, 2018 class period. Defendants moved to dismiss. The motion was granted State Law Claims in part; and denied in part. Defendants also moved to dismiss the Boards causes of action under state law based on (i) Plaintiffs lack ofLegal Analysisreasonable reliance on Defendants misstatements;Jurisdiction The court first addressed whether it had (ii) lack of secondary liability as sellers under thepersonal jurisdiction over the Parent Defendants under Washington State Securities Act; and (iii) failure to statethe theory that the Parent Defendants and Tenaris are a claim for negligent misrepresentation, fraudulentalter egos. The court held that Plaintiffs had adequately conveyance, and conspiracy. Here, the court, analyzingalleged that Tenaris and the Parent Defendants the specific allegations in the Complaint, dismissed theare alter egos for jurisdictional purposes, based on Boards negligent misrepresentation, fraudulent convey- allegations that Tenaris dividends are maintained in ance and conspiracy claims, but found the remainderthe Parent Defendants account, that funds from the of Plaintiffs pleadings sufficient to survive DefendantsParent Defendants account were used to make the motion to dismiss. bribe payments, and that executives from the Parent Defendants delivered the bribe payments in question. In re Tenaris S.A. Sec. Litig., 2020 WLSection 10(b) Claims The court held that Plaintiffs had 6018919 (E.D.N.Y. Oct. 9, 2020)adequately pleaded the existence of a wide-ranging bribery scheme and that the CEO was personally In this securities fraud suit, Plaintiffs alleged that Tenarisinvolved. S.A. (Tenaris), Tenaris CEO and CFO, and TenarisFalsity The court next analyzed the alleged material parent companies (the Parent Defendants) made falsemisstatements and omissions in Tenaris Form 20-Fs. and misleading statements in Tenaris public filings and publicly disclosed employee codes of conduct. PlaintiffsSOX Certifications The court held that Plaintiffs alleged that, during in-person meetings in 2005 andfailed to plead actionable misstatements regarding 2006 that were attended by Argentinas Presidentthe SOX Certifications because Plaintiffs failed to and numerous other senior government officials, theallege that any of Tenaris financial reports were CEO asked the Argentine government to intervene oninaccurate, that Tenaris had made any undisclosed Tenaris behalf and convince Venezuelan Presidentmaterial modifications to its internal controls, or that Hugo Chavez not to nationalize Tenaris Venezuelanthe signatories of the Form 20-Fs had not reported assets. It was alleged that after this meeting,any fraud to the Audit Committee. Defendants paid, indirectly through a third-party, theCode of Ethics The court held that Tenaris CodeKirchners between $600,000 and $700,000 in bribes.of Ethics, and statements in the Form 20-Fs Plaintiffs also allege that, after Venezuela announcedreferencing the Code of Ethics, were not false or that it would nevertheless nationalize the assets in Aprilmisleading because the Code of Ethics is a gener-2008, a Tenaris agent paid over $1 million in addi- alized and aspirational document, does not make tional bribes to Argentine officials to further lobby therepresentations of historical fact, and does not Venezuelan government on Tenaris behalf.promise that its standards would not be violated. 39'