BENGALURU: In a bout of fresh trouble for IT services major Infosys, a Los Angeles-based shareholder litigation firm Schall Law said that it has filed a class action lawsuit against the company. According to the complaint filed by the law firm, Infosys was found involved in making false and misleading statements to the market.
The law firm accused Infosys of violating the 10 (b), 20 (a) Sections of Securities Exchange Act of 1934 and Rule 10 b-5 promulgated thereunder by the US Securities and Exchange Commission.
The US-based law firm has asked all investors who purchased the company’s securities between July 7, 2018 and October 20, 2019 and faced losses over $100,000 to contact them before December 23, 2019.
Bengaluru-based Infosys has also been accused of making improper recognition of revenue to boost short-term profits.
“CEO Salil Parekh skipped standard reviews of large deals to avoid accounting scrutiny. In fact, the company’s finance team was pressured to hide details of these deals and other accounting matters from auditors and the company’s board of directors. Based on these facts, the company’s public statements were false and materially misleading throughout the class period. When the market learned the truth about Infosys, investors suffered damages,” the law firm said in a statement.
Infosys, when contacted, refused to comment on the matter. The allegations have surfaced after Infosys recently said that it has not found any concrete or material evidence to substantiate the whistleblower complaints by an anonymous group of employees and an unnamed letter that alleged Infosys of financial irregularities and held CEO Salil Parekh and CFO Nilanjan Roy of violating the accounting standards.
The Infosys investors lost Rs 45,000 crore in a single session on October 22, when whistleblower allegations surfaced as the stock fell BY 16 per cent on NSE and BSE.
The US Securities and Exchange Commission started a probe into the whistleblower allegations whereas Rosen Law Firm said that it preparing a class action lawsuit against Infosys in order for investors to recover their losses. The share price of Infosys traded at Rs 702 on NSE down by 2.63 per cent from its previous close at Rs 720.