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Los Angeles-based shareholder rights litigation firm, the Schall Law Firm, has filed a class action lawsuit against Infosys , accusing the IT major of making false and misleading statements to investors.
The law firm, in a filing to the US Securities and Exchange Commission, said that investors who purchased Infosys securities between July 7, 2018 and October 20, 2019, can participate in the lawsuit by December 23.
CEO ‘skipped review of deals’
Schall Law Firm on December 11 alleged that Infosys made false and misleading statements to the market. It said the company used improper recognition of revenue to boost short-term profits. It alleged that CEO Salil Parekh skipped standard reviews of large deals to avoid accounting scrutiny.
According to the complaint, the company's finance team was pressured into hiding details of these deals, and other accounting matters from auditors and the company’s board. Based on these facts, the company's public statements were false and materially misleading throughout the class-action period, according to the complaint.
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Schall Law Firm alleged that Infosys was in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the SEC, it said.
This is not the first such class action lawsuit against Infosys this year. On October 23, US-based global investor rights law firm, Rosen Law Firm, filed a class action lawsuit on behalf of purchasers of Infosys securities from July 7, 2018 to October 20, 2019 seeking to recover damages under the federal securities laws.
On November 14, another investor rights law firm, Bernstein Liebhard, said it had filed a securities class action on behalf of investors who purchased or acquired securities of Infosys between the same period mentioned above.
Whistleblower effect
These lawsuits are a result of a whistleblower group that allegedly complained to the SEC and the Infosys board in October that Infosys CEO Salil Parekh was indulging in “unethical practices” to boost short-term revenues and profits.
Sajai Singh, Partner at J. Sagar Associates, said: “Infosys’ lawyers will use all defences including those under Rule 10b5-1 to defend it. At this point it cannot be assumed that Infosys stands to lose millions of dollars because of these class action lawsuits.”
Infosys refused to comment on the latest class action lawsuit.
Legal wrangle
* Lawsuit was filed by LA-based Schall Law Firm
* Infosys charged with making ‘false and misleading statements’ to boost short-term profits
* This, says the complainant, has resulted in losses for Infosys investors in the US
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