The complaint in the US said CEO Salil Parekh skipped standard reviews of large deals to avoid accounting scrutiny.

Infosys faces class action lawsuit in US for false financial statements
Money Infosys Thursday, December 12, 2019 - 15:54
Written by  IANS

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.

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 U.S. 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 2019, a few anonymous employees at Infosys accused the CEO Salil Parekh and CFO Nilanjan Roy of unethical practices for many quarters, along with concerns on Parekh's travels to the US and Mumbai. 

Infosys Chairman Nandan Nilekani later informed that one Board member received two anonymous complaints on September 30, 2019. One of them was dated September 20, 2019, and a second one was undated. He added that these complaints were placed before the Audit Committee on October 10, 2019, and before the non-executive members of the Board on October 11, 2019.  

According to the whistleblowers, Parekh directed the employees to cook account books to show favourable numbers and coerced staffers not to reveal crucial data to board members.