Three US law firms have separately filed class action suits against Infosys a day after American depositary receipts (ADRs) of the IT services giant plummeted with Vishal Sikka's resignation as CEO and MD on Friday.
Bronstein, Gewirtz & Grossman, Pomerantz Law Firm, and Rosen Law Firm launched investigations against India's second largest IT firm, which is also listed on the New York Stock Exchange, over concerns pertaining to potential securities fraud, unlawful business practices and misleading information.
Infy's ADRs fell as much as $1.43 per share, or nearly 9 per cent, during intraday trading on Friday, while in India, the company's stock plunged by about 10 per cent the same day.
The class action suits expand the spot of bother for the IT giant already besieged by multiple crises, ranging from an acquisition alleged to be overvalued to a disruptive Board which culminated in Sikka's exit amid wha he described "personal, malicious" accusations.
"Infosys shareholders have an opportunity to recover their investment losses. Click Join This Class Action," says the website of Rosen Law, which describes itself as a global investor rights firm.
"Bronstein, Gewirtz & Grossman, LLC is investigating potential claims on behalf of purchasers of Infosys [ADR]. Such investors are encouraged to obtain additional information and assist the investigation," said a statement from the New York-based law firm which describes itself as a corporate litigation boutique.
To participate in the class action, stock investor must have accrued a loss.
The firm would investigate "concerns whether Infosys and certain of its officers and directors have complied with federal securities laws," the statement further said.
Pomerantz LLP's press statement said "the investigation concerns whether Infosys and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices."
An ADR is a negotiable certificate issued by a US bank representing a specified number of shares (or one share) in a foreign stock traded on a US exchange, according to investor education website, Investopedia.
Near the beginning of a securities fraud case, a US court would appoint a lead plaintiff to prosecute the lawsuit on behalf of the members of the class action.
