Monday, 30th October 2017

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Infosys faces class action lawsuit in US

Infosys told bourses it has been in touch with the SEC and will cooperate with the probe

  • Published 25.10.19, 12:56 AM
  • Updated 25.10.19, 12:56 AM
  • a min read
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Infosys CEO Salil Parekh (left), chief operating officer Pravin Rao (behind) and CFO Nilanjan Roy (second from right) in Bangalore. PTI

A class action lawsuit was filed against Infosys in the United States District Court for the eastern district of New York following the allegations made by anonymous complaints.

The Telegraph has seen a copy of the class action suit filed by Rosen Law Firm, which said that after the news of the whistleblower letter came out, the Infosys ADS fell $1.28, or over 12 per cent, to close at $9.29 per ADS on October 21, hurting investors.

It alleged that as a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the ADS, the plaintiff and other class members have suffered significant losses and damages. It also alleged that the defendants (which included Salil Parekh) omitted material information in their class period statements.

It pointed out that the class action suit is on behalf of persons or entities who purchased the Infosys securities from July 7, 2018 through October 20, 2019 (the class period). The plaintiff sought to recover “compensable damages caused by defendants” violations of the federal securities laws under the Securities Exchange Act of 1934, it said.

In a communication to the bourses on Thursday, Infosys said: “The company is also aware of a securities class action lawsuit that has been filed against the company in a federal court in the United States based on the generalised allegations in the anonymous complaints. The company intends to defend itself vigorously in such a lawsuit.’’

SEC investigation

To add to its troubles, the US Securities and Exchange Commission (SEC) has initiated a probe into the recent whistleblower complaints at Infosys.

Infosys told the bourses it has been in touch with the SEC and will co-operate with the investigation.

It went on to disclose that Sebi has also requested additional information from the company regarding the anonymous complaints.

On the BSE, the Infosys scrip fell 2.36 per cent to close at Rs 635.40. Around 17.26 lakh shares of the company were traded on the BSE and over 2.5 crore shares on the NSE.

Makarand Joshi, partner at MMJC and Associates Llp, observed that under the current Sebi LODR regulations, there are no clauses that makes it mandatory to disclose the whistleblower letter to the bourses. He, however, added that as a principle every material information needs to be informed to bourses under regulation 30 of Sebi LODR.