Petroleo Brasileiro SA has less than seven months to prepare to confront investors in a U.S. court over losses stemming from a multi-billion-dollar bribery scheme.
Judge Jed Rakoff, who is overseeing U.S. cases against state-owned oil giant, told the company late Thursday that a trial would begin no later than Feb. 1. That’s an unusually short period of time to prepare.
The decision wasn’t a complete loss for Petrobras. Rakoff said one claim by investors who traded in Brazil must be heard in arbitration while allowing those by shareholders who bought on U.S. exchanges go to trial in Manhattan federal court.
Investors say Petrobras executives published misleading financial statements and overstated the quality of internal controls during a multi-year money-laundering and bribery scheme.
Petrobras had argued the case should be thrown out because it was a victim of a plot run by contractors and “rogue” politicians with help from a few corrupt employees. Cash traded for political favors was stolen from the oil company, Petrobras said.
Brazilian prosecutors have so far endorsed the view that the company was a victim. The U.S. Securities and Exchange Commission and Justice Department haven’t taken a position in their investigations.
Petrobras, which once had a market value of $310 billion, is now worth $52 billion. The group lawsuit, led by a U.K. pension fund, wants compensation for all investors who bought securities from January 2010 to March 2015.
Jeremy Lieberman, a lawyer for the investors, said in a statement he was pleased with the ruling. Rio de Janeiro-based Petrobras said it will continue “acting firmly in defense of its rights.”
In his three-page ruling, Rakoff dismissed claims related to a 2012 note issue, saying the investors waited too long to sue. The judge said he’ll explain his decision in a later opinion.
The case is In re Petrobras Securities Litigation, 14-cv-09662, U.S. District Court, Southern District of New York (Manhattan).