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HDFC Bank refutes charges of misleading investors, vows to defend itself in lawsuit

The lawsuit is based on allegations that HDFC Bank employees made false and misleading statements to the market that caused a temporary decline in the bank's ADR stock price in July 2020

twitter-logoBusinessToday.In | September 21, 2020 | Updated 15:59 IST
HDFC Bank refutes charges of misleading investors, vows to defend itself in lawsuit
US-based Rosen Law Firm and Schall Law Firm had filed class action lawsuits against HDFC Bank

HDFC Bank on Monday said that it is aware of a complaint that was recently filed against the lender in the United States. The lender, however, denied allegations of improper lending practices at its vehicle loans unit which caused damages to several investors, saying that it will "defend itself vigorously in the lawsuit". The bank expects its response to the lawsuit to be due in early 2021.

"The bank is aware of a complaint that was recently filed against the bank and its three employees in the United States. The lawsuit, which was filed by a single small security holder who seeks to represent a class of the Bank's security holders, is based on allegations that the security holder claims caused a temporary decline in the Bank's American Depositary Receipt (ADR) stock price in July 2020. The bank denies the allegations and intends to defend itself vigorously in the lawsuit," HDFC Bank said in a filing to the Bombay Stock Exchange.

The lender further stated that as the lawsuit is at a premature stage, there is no matter at this point of time which requires regulatory disclosure.

Also Read: Lawsuits against HDFC Bank in US over misleading statements, improper lending practices

US-based Rosen Law Firm and Schall Law Firm had filed class action lawsuits against HDFC Bank, accusing the private lender of failing to reveal to investors about improper lending practices at its vehicle loans unit and making misleading statements. The civil action lawsuits, which has been filed in the US District Court Eastern District of New York, named HDFC Bank's outgoing managing director Aditya Puri, CEO-designate Sashidhar Jagdishan, and company secretary Santosh Haldankar.

Also read: HDFC Bank fires 6 employees over 'improper lending' related to car loans

The law firm alleged that senior employees of the bank made false and misleading statements to the market and failed to maintain appropriate disclosure and internal controls on financial reporting. The class action lawsuits have been filed on behalf of purchasers of the securities of HDFC Bank between July 31, 2019 and July 10, 2020 and seeks to recover damages for HDFC investors under the federal securities laws.

Earlier Rosen Law had filed similar class action complaint against Infosys which was later quashed by the US court in July this year.

By Chitranjan Kumar

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