Infosys, the country's second largest IT services firm, which is embroiled in allegations of indulging in unethical practices, may find itself slapped with a class action suit soon. Rosen Law Firm, a global investor rights law firm, said in a statement on Monday that it is "preparing a class action lawsuit to recover losses suffered by Infosys investors".
The suit will be on behalf of persons or entities who purchased or otherwise acquired publicly-traded Infosys securities between July 7, 2018, and October 20, 2019. "Plaintiff seeks to recover compensable damages caused by Defendants' violations of the federal securities law," read the draft complaint prepared by the firm.
The New York based law firm has put out a "Infy Loss Notice", adding that it "continues to investigate potential securities claims on behalf of shareholders of Infosys Limited (NYSE: INFY) resulting from allegations that Infosys may have issued materially misleading business information to the investing public".
The IT major saw its stock plummet 16 per cent on the BSE on Tuesday on concerns over a whistleblower's complaints. An anonymous employee group calling itself 'Ethical Employees' accused Infosys CEO Salil Parekh and Chief Financial Officer (CFO) Nilanjan Roy of indulging in unethical practices to boost short-term revenue and profits, adding that they have emails and voice recordings to back their claims.
In a complaint letter to the board of Infosys and the US Securities and Exchange Commission (SEC) last month, the group alleged that they were asked not to "fully recognise costs like visa costs" in the last quarter to show more profit. And when the auditor pointed it out, the issue was postponed by the company, they claimed.
Infosys Chairman Nandan Nilekani said on Tuesday that the company's audit committee will conduct an independent investigation on whistleblower allegations. The committee began consultation with independent internal auditors EY, and has retained law firm, Shardul Amarchand Mangaldas & Co. to conduct an independent investigation, Nilekani noted in his statement to the stock exchanges. The company has recused Parekh and Roy to ensure impartial probe.