Satyam faces lawsuit in New York court
Washington: A US law firm has filed class action law suit against Satyam Computer Services Ltd in a New York court on behalf of those who purchased the company's American Depository Receipts over the last five years.
The complaint by the law firm of Izard Nobel LLP in the District Court for the Southern District of New York charges the fallen Indian outsourcer and certain of its executives of violating federal securities laws by issuing materially false and misleading statements.
After Wednesday's admission by the Company's CEO B Ramalinga Raju of a "multi-year" fraud in which Satyam's financial accounts and disclosures were systematically falsified, "the Company's ADRs fell $8.42, or 90 per cent, prior to the opening of the New York Stock Exchange," it noted.
Trading in Satyam Computer Services Ltd was halted on the New York Stock Exchange ahead of the market's open Wednesday.
The stock exchange said its regulators were evaluating news related to India's fourth-largest software company, with its shares halted until further notice.
The New York Times citing analysts said the revelations by the company's founder "could cause a major shake-up in India's enormous outsourcing industry and may force many large companies to investigate and perhaps revamp their back offices.
"This development is going to have a major impact on Satyam's business with its clients," it cited analysts with Religare Hichens Harrison as saying. In the short term "we will see lot of Satyam's clients migrating to competition like Infosys, TCS and Wipro," they said.