The Brazilian federal prosecutor in charge of investigating systemic tax fraud says cases against Petrobras (NYSE:PBR), Embraer (NYSE:ERJ) and processed food producer BRF (NYSE:BRFS) lack sufficient evidence of any wrongdoing, and he will instead focus on cases in which he believes he has solid evidence.
Ford Motor's local unit also is among companies dropped from the list singled out in early 2015.
The prosecutor's refocused investigation will include Bank Boston, a lender that was owned by Bank of America before being purchased by Itau Unibanco (NYSE:ITUB) and steelmaker Gerdau (NYSE:GGB).
The prosecutor says he could take up the suspended investigations again in 2017.
Brazilian steelmaker Gerdau (NYSE:GGB) fell 7% in today's U.S. trading after police indicted 19 people for their alleged involvement in a tax evasion scandal linked to the company.
The two-year Zelotes investigation centers on exposing fraudulent activities involving Brazil’s board of tax appeals, and is separate from the Carwash scandal, a kickback scheme centered around oil producer Petrobras.
"The key concern is whether the company will have to pay fines,” Morningstar's Andrew Lane tells Bloomberg. “The dollar figure of which the company is alleged to have evaded taxes is a very large one given its market capitalization is only about $3B.”
U.S. Steel (NYSE:X) tumbled 10.4% and AK Steel (NYSE:AKS) sank 5.4% in today's trade as analysts say more attractive prices for U.S. steel and falling Chinese prices likely will raise the appeal of targeting the U.S. market even after import tariffs were introduced in recent months for some products.
U.S. Steel has jumped 85% YTD for its best year in more than a decade, but investors now are spooked by fears that steel prices will follow falling prices for raw materials such as iron ore, says BMO Capital analyst David Gagliano.