Infosys Faces Another Lawsuit In U.S. After Whistleblower Allegations
Schall Law Firm says will file a lawsuit against Infosys to recover losses suffered by investors after whistleblower allegations.
U.S.-based Schall Law Firm has said it will file a class action lawsuit against Infosys Ltd. to recover losses suffered by investors in the wake of whistleblower allegations of "unethical practices" at the Indian software services firm.
The company, in an exchange filing Friday, said that it was not aware of any additional complaints, other than those disclosed on Oct. 24. “It appears press communications by the Schall Law Firm is soliciting potential lead plaintiff applicants,” it said.
In October, Infosys had informed the stock exchanges of having received anonymous whistleblower complaints alleging certain unethical practices by the top management.
U.S. market regulator Securities and Exchange Commission has also initiated a probe into the matter, while Rosen Law Firm had said it was preparing a class action lawsuit to recover losses suffered by Infosys investors in the U.S.
"The Schall Law Firm, a national shareholder rights litigation firm, announces the filing of a class action lawsuit against Infosys Ltd for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the US Securities and Exchange Commission," a statement said.
It asked investors who had purchased the company's securities between July 7, 2018 and Oct. 20, 2019, inclusive (class period), to contact the firm before Dec. 23, 2019.
Earlier, Chairman Nandan Nilekani had said the Infosys whistleblower letter dated Sept. 20, as well as an undated complaint, had been received by one of the board members on Sept. 30.
The Sept. 20 letter, signed by ''Ethical Employees'', alleged that Chief Executive Officer Salil Parikh as well as Chief Financial Officer Nilanjan Roy engaged in forced revenue recognition from large contracts not adhering to accounting standards.
The complaints were placed before the company’s audit committee on Oct. 10, and to the company's non-executive board members on Oct. 11, also the day when Infosys announced its second quarter results.
Infosys has been investigating the whistleblower complaints. An external law firm has been roped in to conduct an independent investigation into the allegations.
The Bengaluru-based company has said it will share the outcome of the investigation with all stakeholders at a relevant time. The Securities and Exchange Board of India, the country’s market regulator, had sought additional information from the company, while the National Financial Reporting Authority, or NFRA—part of the corporate affairs ministry—is also looking into alleged accounting lapses at the firm.