Aracruz Celulose S.A. may have misrepresented to investors its policy on currency hedging as it took an undisclosed speculative position losing significant monies.

This is a securities fraud class action lawsuit against Aracruz Celulose S.A.

Aracruz is a major Brazilian manufacturer of forest products, which they market to manufacturers of consumer paper products around the world.

Aracruz entered into undisclosed currency derivative contracts to purportedly hedge against Aracruz's U.S. dollar exposure. Aracruz characterized the use of these contracts as protection against foreign interest rate volatility and assured investors that this type of trading did not represent "a risk from an economic and financial standpoint."

However, these contracts violated Aracruz policy in that they were far larger than necessary to hedge normal business operations. As a result of Aracruz's clandestine and speculative currency wagers, credit rating agencies downgraded Aracruz, its CFO resigned, and Aracruz's stock suffered a severe decline, plummeting to the lowest levels in 14 years. On October 3, 2008, the price of the ADR's traded on the New York Stock Exchange closed at $23.40, down $7.84 per share, a decline of 25%. Aracruz's common stock suffered similar drastic declines on the Sao Paulo Bovespa.