In some fresh trouble for Infosys, New York-based Rosen Law Firm is preparing a class action lawsuit to recover losses suffered by investors in the US.
The proposed suit was triggered due to losses caused to shareholders on account of whistleblower allegations that Infosys may have issued materially misleading business information to investors.
Shareholders who bought publicly traded Infosys securities between July 7, 2018 and October 20, 2019 will be part of the suit. “Plaintiff seeks to recover compensable damages caused by Defendants’ violations of the federal securities law,” the firm said.
Typically, a class action lawsuit is filed on behalf of a group of US retail investors when damages claimed by each are too small for individual claims to be worthwhile. The cases usually end in settlement instead of going to trial.
Infosys’ NYSE-listed American Depository Receipts continued to trade in the red on Tuesday, falling 3% in early trade. On Monday, its shares had tanked as much as 15%.
The scrip plunged 16% on the BSE on Tuesday as Infy’s early-morning statement on the next course of action failed to restore market confidence.
Rosen Law Firm is a global investor rights law firm, and has investigated Infosys in the past at least on one occasion. In 2017, along with two others —Bronstein, Gewirtz & Grossman and Pomerantz Law Firm — it investigated the IT services firm for a potential securities fraud and unlawful business practices.
On Monday, letters sent by an anonymous employee group calling itself ‘Ethical Employees’ became public, unnerving investors on account of dire accusations such as boosting short-term revenue and profits bypassing standard accounting norms, financial impropriety besides remarks of racism and misogyny.
Nandan Nilekani steps in to douse fire
Infosys Chairman Nandan Nilekani said the company’s audit committee was looking into the allegations in consultation with independent internal auditors EY, while law firm Shardul Amarchand Mangaldas & Co was roped in to launch an independent probe. Infy also recused CEO Salil Parekh and CFO Nilanjan Roy to ensure an impartial probe