Infosys faces class-action lawsuit in US for false financial statements

The share price of Infosys traded at Rs 702 on NSE down by 2.63 per cent from its previous close at Rs 720.

Published: 12th December 2019 03:54 PM  |   Last Updated: 13th December 2019 10:32 AM   |  A+A-

Infosys

Infosys (Photo | EPS)

Express News Service

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.

Stay up to date on all the latest Business news with The New Indian Express App. Download now
(Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.)

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp