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US securities exchange to probe whistleblower complaints against Infosys

Infosys says it is aware of a securities class action lawsuit that has been filed against it in a federal court in the United States and that it will defend itself "vigorously"

twitter-logoBusinessToday.In | October 24, 2019 | Updated 10:20 IST
US securities exchange to probe whistleblower complaints against Infosys
A whistleblower complaint says Infosys used 'unethical practices' to boost revenue and profit.

Infosys on Thursday said the US Securities and Exchange Commission had launched an investigation into whistleblower allegations against Chief Executive Officer Salil Parekh and Chief Financial Officer Nilanjan Roy. "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. The company will cooperate with the SEC's investigation," Infosys told stock exchanges.

In a complaint letter to the board of Infosys and the US Securities and Exchange Commission (SEC) last month, an anonymous group of employees had 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.

Meanwhile, Infosys has said India's market regulator Securities and Exchange Board of India (SEBI) has also requested additional information from it concerning the complaints. "SEBI has requested additional information from the company concerning the anonymous complaints. The company will provide the information as per SEBI's request," said Infosys.

Reports suggest SEBI has also started a preliminary probe into the allegations of 'unethical practices' against the company. "The allegations are serious. A proper enquiry into the matter is needed. We have taken the matter for a preliminary enquiry," Business Standard quoted a source as saying.

Infosys told the stock exchanges that it was also aware of a securities class action lawsuit that had been filed against the company in federal court in the United States based. "The company intends to defend itself vigorously in such a lawsuit," it added. Rosen Law Firm, a global investor rights law firm, said in a statement on Monday that it was "preparing a class action lawsuit to recover losses suffered by Infosys investors".

A day after Infosys admitted to having received the complaint letter, Sebi and BSE on Wednesday sought clarification from the tech giant for not disclosing information regarding the whistleblower complaint. Sebi and BSE said the company had not made any "disclosures under Regulation 30 of SEBI (LODR) Regulations, 2015, w.r.t. receipt of whistleblower complaint" against it. A day earlier, Infosys had said it was investigating the "unethical practices" complaint.

Infosys said both the complaints made by the group called 'Ethical Employees' had been placed before the Infosys audit committee and its non-executive members. The company placed "both complaints before the audit committee on October 10, 2019, and before the non-executive members of the Board on October 11, 2019."

Infosys share price recovered some lost ground in early trade on Thursday. Its share price dipped 0.86 per cent to Rs 645 compared to the previous close of Rs 650 on BSE on Wednesday. Infosys share has gained after three days of consecutive fall.

Edited by Manoj Sharma

Also read: Infosys pays for CEO Salil Parekh's weekly personal trips, alleges whistleblower letter

Also read: Infosys whistleblower complaint: US law firm says it is preparing a class action suit

Also read: Uncertainty hits Infosys, yet again

Also read: Infosys Chairman Nilekani recuses CEO Parekh, CFO Roy from investigation of allegations

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