US Securities & Exchange Commission, SEBI Begin Probes Into Whistleblower Complaints Against Infosys Top Brass
By : Legal Era
Update: 2019-10-24 10:29 GMT
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[ By Bobby Anthony ]The United States Securities & Exchange Commission (SEC) has initiated an investigation into the anonymous whistleblowers complaints about alleged accounting malpractices by the top brass of Infosys, the company has informed stock exchanges.“The company will co-operate with the SEC’s investigation, the company said in a Bombay Stock Exchange (BSE) filing.In a...
The United States Securities & Exchange Commission (SEC) has initiated an investigation into the anonymous whistleblowers complaints about alleged accounting malpractices by the top brass of Infosys, the company has informed stock exchanges.
“The company will co-operate with the SEC’s investigation, the company said in a Bombay Stock Exchange (BSE) filing.
In a regulatory filing, Infosys also stated that Securities & Exchange Board of India (SEBI) has requested additional information from the company concerning the anonymous complaints, adding that the company will provide the information.
Infosys mentioned in its filing that it is aware that a securities class action lawsuit has been filed against the company in a federal court in the United States based on the generalized allegations in the anonymous complaints.
The company has stated that it intends to defend itself vigorously in such a lawsuit.
Incidentally, SEBI has already begun its probe into alleged non-disclosure of price-sensitive information by Infosys’ top management and also corporate governance lapses in the wake of serious allegations leveled by whistleblowers.
SEBI is also examining possible insider trading in the company's securities. It has initiated an investigation into the buildup of huge derivatives positions in Infosys shares just before whistleblower allegations of accounting malpractices against CEO Salil Parekh and Chief Financial Officer Nilanjan Roy went public.
Allegedly, huge derivatives positions were built up and put positions were accumulated in the November series of Infosys.
The whistleblower complaint which was made to the Infosys management as well as the US Securities and Exchange Commission (SEC) became public on October 21.
The development saw American Depository Receipts (ADRs) of Infosys slump 17%, and more than 16% in India during the immediate few days after the whistleblowers’ allegations became public.
Significantly, the SEBI chose to take suo motu cognizance of the whistleblower compliant though it was not made to SEBI itself.