Wednesday, October 28, 2020

Business

US law firm's plaint not uncommon: Infosys

December 13, 2019 03:26 PM

MUMBAI/BENGALURU:Software major Infosys on Friday said it was not uncommon for law firms to solicit plaintiffs in a lawsuit.
The Company notes that it is not uncommon for plaintiffs' lawyers to issue press releases or other media communications asking potential plaintiffs to contact them in order to apply for lead plaintiff status in an existing lawsuit, " said Infosys in a statement to the BSE.

Infosys said it is aware of several circulating media stories referring to additional securities class action lawsuit against the company.

However, the company said it not aware of any additional complaints than the initial complaint disclosed on October 24, 2019.

"The company (Infosys) is aware of several media stories referencing an additional securities class action lawsuit against Infosys. The company is not aware of any additional complaints, other than the initial complaint, which was disclosed on October 24, 2019, " Infosys said.

On October 24, Infosys replied to a clarification sought by the BSE on October 23, for not making any disclosure adhering to Rule 30 of the Securities and Exchange Board of India's (SEBI) Listing Obligations and Disclosure Requirements (LODR), about receiving whistleblower complaints

Earlier on October 22, Infosys submitted a statement to the BSE, attributing to chairman Nandan Nilekani, mentioning that the company received whistleblower complaints which was not in conformity with the LODR.

Later, addressing the BSE, National Stock Exchange of India and the New York Stock Exchange, Infosys said on October 24 that the company was in touch with the Securities and Exchange Commission (SEC) about anonymous whistleblower complaints.

"The Company has been in touch with the Securities and Exchange Commission ("SEC") regarding the anonymous whistleblower complaints ("Anonymous Complaints") and has learnt that the SEC has initiated an investigation into this matter, " said Infosys in October.

On Thursday, IANS reported about a class action lawsuit filed by The Schall Law Firm in the US against the $11 billion IT company headquartered in Bengaluru, for making false and misleading statements to the market, and using improper recognition of revenue to boost short-term profits.

The lawsuit alleged that Infosys chief executive Salil Parikh skipped standard reviews of large deals to avoid accounting scrutiny.

Further, the complaint exhorted that Infosys's finance team was pressurised 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 (Infosys) public statements were false and materially misleading throughout the class period. When the market learned the truth about Infosys, investors suffered damages, " said a statement by the law firm.

The law firm encouraged investors with losses in excess of $100, 000 to contact the firm.

Investors who purchased the company's securities between July 7, 2018 and October 20, 2019, inclusive of (the "Class Period"), have been asked to contact The Schall Law Firm before December 23, 2019.

In reaction to the Schall Law Firm lawsuit, the IT behemoth said: "It appears that the press communications by the Schall Law Firm is soliciting potential lead plaintiff applicants."

The Schall Law Firm represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation.

Earlier in October and November, Parikh was lambasted by two whistleblower letters from within the company, addressed to the board, making multiple allegations of unethical practices for several quarters.

The allegations against Parikh and chief financial officer Nilanjan Roy by a group of anonymous employees calling themselves as 'ethical employees' included wilful misstatement material accounting irregularities, and restraining employees from showing large deal issues to the board during presentations to making racist comments on board members.

On November 11, another whistleblower's letter from the company's finance department rocked Infosys, unleashing a barrage of charges such as Parikh's unaccounted travels to grabbing the company's sponsored vantage point seats at the ATP tournaments for personal use.

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