UPDATE 2-Investors sue Embraer in New York, claim stock was inflated

Wed Aug 10, 2016 11:04am EDT
 
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SAO PAULO Aug 10 (Reuters) - Shareholders filed a class action lawsuit against Brazil's Embraer SA in New York, alleging that actions by management at the world third-largest commercial planemaker inflated the company's stock price for a four-year period.

The lawsuit was filed late Monday in the U.S. District Court in Manhattan, and named the São Jose dos Campos-based company as well as former Chief Executive Officer Frederico Curado and current Chief Financial Officer José de Almeida Filippo as defendants.

The lawsuit alleges Embraer concealed its ties to the bribing of Dominican Republic officials to secure contracts to sell military aircraft, culminating in last month's decision to set aside $200 million to settle a corruption probe by U.S. authorities, documents seen by Reuters showed.

Shares fell for a second day on Wednesday as analysts such as Pete Skibitski of Drexel Hamilton were concerned that related proceedings are ongoing in other countries, which could result in additional fines.

Embraer shares fell 1.2 percent to 14.58 reais, extending their year-to-date skid to about 51 percent.

The lawsuit was brought on behalf of investors in Embraer's American Depositary receipts.

The New York-traded ADRs, which have fallen 37 percent this year, shed 1 percent to $18.56 in early Wednesday trading.

According to the legal documents, on March 16 various media outlets reported that Elio Sonnenfeld, a sales consultant who allegedly paid bribes on behalf of Embraer, told Brazilian prosecutors he believed top Embraer managers knew of the illicit payments made in connection with the Dominican Republic sales. Curado stepped down as CEO on June 9. (Reporting by Tatiana Bautzer in São Paulo; Additional reporting by Jonathan Stempel in New York and Guillermo Parra-Bernal in São Paulo; Editing by Chizu Nomiyama and Jeffrey Benkoe)