INFOSYS Trouble: US Law firm files class action suit

INFOSYS Trouble: US Law firm files class action suit

               

               

Infosys, a global leader in technology and consulting used improper recognition of revenue to boost short-term profits and company was pressurized to hide details of big deals from auditors  and also from company’s board of directors.

A shareholder rights litigation firm named “Schall Law Firm” announced the filing of a class action law suit against Infosys limited.

The Schall Law firm accused “Salil Parekh”, Chief executive of Infosys limited of avoiding standard reviews of big deals to get rid of scrutiny. Infosys made false and misleading statements to market and used improper recognition of revenue to boost short term profits. The law firm said Infosys finance team pressurized  to hide details on these deals from auditors. 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."

Also investors with losses over $ 100000 were invited by the law firm  to contact the firm. Lawsuit has been filed for violations of 10(b) and 20(a) of Securities and Exchange Act of 1934 and rule 10 b-5.

The lawsuit comes under the allegations of “unethical practices”. Also , a letter written by a group of employees said that Salil Parekh and the Chief Financial officer were forced revenue recognition from large contracts and they were not following accounting standards . The letter also alleged that the  CEO prevented the employees from highlighting the issues in board meets.

US market regulator Securities and Exchange Commission which had  received a copy of the letter, has already initiated a concern into the matter, while Securities and Exchange Board of India sought additional information as part of its concern into the allegations. The National Financial Reporting Authority (NFRA)  which is the part of the corporate affairs ministry is  looking into alleged accounting lapses.