Brazilian processer, Sadia gets sued over currency losses
A New York retirement fund has sued Brazilian meat processing giant Sadia S.A. over shareholder losses after the company announced in September it lost about US$350 million on foreign exchange futures positions.
The lawsuit, which is seeking class-action status, was filed in the US District Court in Manhattan by the Westchester Putnam Counties Heavy and Highway Laborers Local 60 Benefits Funds on behalf of labor union funds in the state of New York, according to wire service reports.
In simple terms, the currency derivative contracts were pure speculation on the part of Sadia, a high stakes gamble that went undisclosed to the company's shareholders, stated the lawsuit.
It seeks damages on behalf of purchasers of Sadia's American depositary receipts (ADRs), which are traded on the New York Stock Exchange, between April 30 and September 26 2008.
The U.S. dollar has appreciated dramatically against the Brazilian real in recent months. Sadia's ADRs have fallen about 74 percent over the past three months, according to Dow Jones.