A class action suit was filed against HDFC bank by the US-based Rosen Law firm and Schall law firm with allegations that HDFC Bank has been making false public statements and are facing internal control problems in regards to vehicle loans. The case was filed on 14th September with the outgoing name of the managing director Aditya Puri, CEO designate Sashidhar Jagdishan and the company secretary Santosh Haldankar as ‘Individual Defendants’ and collectively with the bank as ‘defendants.
The law suit was filed at the US District Court Eastern District of New York. The suit was filed in the interest of all the equity shareholders who purchased their holdings from July 31st ’19 to July 10 ’20. The class filing action on Rosen Law’s website says that, “throughout the class period, defendants made materially false and misleading statements regarding the bank’s business, operational and compliance policies.” Specifically, the bank “made false and/or misleading statements and/or failed to disclose” that it had “inadequate disclosure controls and procedures and internal control over financial reporting.”
There had been an instability in the financing operations of the vehicle’s policies which in turn led to “improper lending practices in its vehicle-financing operations”.
A statement was made, which mentioned- “All the foregoing, once revealed, was foreseeably likely to have a material negative impact on HDFC Bank’s financial condition and reputation; and … as a result, HDFC bank’s public statements were materially false and misleading at all relevant times.”
These situations have made the investor’s capital investment in this stock smash down. The lawsuit filed also included that due to the improper management the price at the American stock exchange also fell of about 2.83%
According to the former head of the financing operations- Ashoka Khanna, Investors who had acquired the shares “at artificially inflated prices during the class period” suffered “significant losses and damages,” after the revelation.
HDFC bank wasn’t immediately available for comment. This led to the fall in the prices of abput 0.94% which closed at Rs. 1083.25 PER SHARE on BSE.
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