LOS ANGELES :
US-based the Schall Law Firm, a shareholder rights litigation firm based in Los Angeles has announced the filing of a class action lawsuit against Infosys Limited.
According to the complaint, Infosys made false and misleading statements to the market and used improper recognition of revenue to boost short-term profits.
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 allegations of "unethical practices" at the Indian IT major.
This comes months after a whistleblower complained against Infosys and its CEO Salil Parekh on the similar lines. However, the company later after an investigation said it could not find the evidence.
The complaint in the US said CEO Parekh skipped standard reviews of large deals to avoid accounting scrutiny. In fact, the company's finance team was pressured to hide details of these deals and other accounting matters from auditors and the company's Board of Directors.
"Based on these facts, the company's public statements were false and materially misleading throughout the class period. When the market learned the truth about Infosys, investors suffered damages", a statement by the law firm said.
Schall said it encourages investors with losses in excess of $100,000 to contact the firm.
The class action lawsuit against Infosys Limited listed on NYSE for violations of 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.
Investors who purchased the company's securities between July 7, 2018 and October 20, 2019, inclusive (the "Class Period"), have been asked to contact the firm before December 23, 2019, it said.
The Schall Law Firm represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation.
In October, Infosys had informed the stock exchanges of having received anonymous whistleblower complaints alleging certain unethical practices by the top management.
US market regulator SEC has also initiated a probe on the matter, while Rosen Law Firm had said it was preparing a class action lawsuit to recover losses suffered by Infosys investors in the US.
"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 October 20, 2019, inclusive (class period), to contact the firm before December 23, 2019.
Infosys declined to comment on the matter.Company shares dropped 2.63 per cent on the BSE Thursday.
Infosys Chairman Nandan Nilekani had said the whistleblower complaint dated September 20, as well as an undated complaint had been received by one of the board members on September 30.
In the letter, dated September 20, and signed by ''Ethical Employees'', it was alleged that CEO 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 audit committee on October 10, and to the company's non-executive board members on October 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 the relevant time.
The Securities and Exchange Board of India (Sebi) had sought additional information from the company, while the National Financial Reporting Authority (NFRA) – part of the corporate affairs ministry – is also looking into alleged accounting lapses at the firm.