YPF SA, the crude-oil producer seized by the Argentine government in 2012, and underwriters including Goldman Sachs Group Inc. (GS) won dismissal of an investor lawsuit in which the company was accused of making false statements before its March 2011 public offering.
YPF, its directors and the underwriters were accused in the lawsuit filed last February of failing to disclose in a registration that the company faced a risk of nationalization by the Argentine government. Morgan Stanley (MS) and Credit Suisse Group AG (CSGN) were also sued as underwriters along with New York-based Goldman Sachs. Repsol SA (REP), the Madrid-based company from which YPF was seized, was also a defendant.
U.S. District Judge Shira Scheindlin today granted the defendants’ requests to dismiss the suit, saying investors failed to adequately state a claim that there were material misrepresentations or omissions. She also said the investors failed to file timely claims and that many of the omissions they alleged “were fully disclosed or matters of public knowledge.”
Argentine President Cristina Fernandez de Kirchner’s administration seized YPF, the country’s biggest producer of crude, in April 2012 from Repsol. Argentina holds the world’s second-largest reserves of shale gas and the fourth-largest of shale oil, according to U.S. Energy Information Administration data. The country is offering tax and export incentives to energy companies that invest at least $1 billion over a five-year period.
Repsol is close this month to reaching an agreement with Argentina on final terms of a compensation package for the seizure of its YPF unit, ending an almost two-year conflict, two people with knowledge of the process said. Repsol executives were working on the document in Buenos Aires with members of Argentine Economy Minister Axel Kicillof’s team, said the people, who asked not to be identified before a binding agreement was signed.
Repsol and YPF were accused in the lawsuit filed in Manhattan federal court of making “optimistic public announcements” while they faced an increased possibility of a takeover because of a failure to “adequately produce oil and gas within Argentina” and reinvest a “substantial portion” of profits into operations, according to the complaint.
Begona Elices Garcia, a Repsol spokeswoman, didn’t immediately respond today to an e-mail after regular business hours seeking comment on the ruling in the lawsuit filed by the Monroe County Employees Retirement System in Michigan.
Mary Claire Delaney, a spokeswoman for Morgan Stanley, Michael DuVally, a Goldman Sachs spokesman, and Drew Benson, a spokesman for Credit Suisse, didn’t immediately respond to e-mail messages after regular business hours seeking comment on the ruling.
The case is Monroe County Employees’ Retirement System v. YPF SA, 13-cv-00842, U.S. District Court, Southern District of New York (Manhattan).
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