U.S.-Based Law Firm Launches Investigation Against HDFC Bank
A New York-based law firm has initiated an investigation of potential securities claim on behalf of the shareholders of HDFC Bank Ltd. following allegations that the private lender may have “issued materially misleading business information to the investing public”.
Rosen Law Firm—that according to details on its website represents individual and institutional investors injured by corporate fraud, breaches of fiduciary duty, and other financial wrongdoings—is preparing a securities lawsuit against HDFC Bank, and has invited the lender’s shareholders to join the class action lawsuit, according to a media statement released on Aug. 16.
The law firm citied media reports on alleged impropriety in the bank’s vehicle financing department and delays in reporting customer data to the Indian unit of Experian Plc, a credit bureau, which drew the attention of the Reserve Bank of India. The bank, the statement highlighted, has missed analyst estimates in the quarter ended June and its asset quality deteriorated.
"We were unaware of any such development (class action lawsuit) till we heard about it from the media a little earlier today," An HDFC Bank spokesperson told BloombergQuint over an email. "We are getting details of it. We’ll examine it and respond to it as appropriate. Prima facie it does look frivolous as we believe we have been transparent in our disclosures."
On July 23, the RBI had sought details about HDFC Bank’s probe in to the improprieties in its vehicle finance division, Bloomberg had reported. Earlier, Aditya Puri, managing director and chief executive officer at HDFC Bank, had told shareholders that after receiving a whistleblower complaint, the private lender had conducted an internal investigation into the car loan business, and had taken strict action against employees who were found to have been involved in “personal misconduct”.
On Aug. 6, another report by Bloomberg said the banking regulator had been informed about how Experian had seen delays in receiving loan repayment information of millions of retail borrowers from HDFC Bank.
Shares of HDFC Bank dropped 0.54% in early trade on Monday, compared with a 0.18% gain in the benchmark Nifty 50 Index.