US SEC initiates inquiry into whistleblower allegations at Infosys

Infosys on Thursday said that US market regulator SEC has initiated a probe on whistleblower complaints that alleged "unethical practices" by top manment of IT major. Also, Securities and Exchange Board of India (Sebi) has sought ditional information from company on issue. 

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'Infosys in touch with SEC'

" company has been in touch with Securities and Exchange Commission (SEC) regarding anymous whistleblower complaints (anymous complaints) and has learnt that SEC has initiated an investigation into this matter. company will cooperate with SEC's investigation," Infosys said in a statement.

Also, SEBI has requested ditional information from company concerning anymous complaints, and Infosys will provide information as per its request, it ded. Infosys said it is also "aware of a securities class action lawsuit" that has been filed against company in federal court in US based on generalised allegations in anymous complaints. " company intends to defend itself vigorously in such a lawsuit," it ded.

US-based Rosen Law Firm h previously said it was preparing a class action lawsuit to recover losses suffered by Infosys investors in US. Following reports of whistleblower allegations on Monday, Infosys h informed stock exchanges of having received anymous whistleblower complaints alleging certain unethical practices. Bengaluru-based company said that se h been placed before audit committee. On Tuesday, in a more detailed statement, Infosys Chairman Nandan Nilekani said whistleblower complaint dated September 20 as well as an undated complaint h been received by one of board members on September 30. se were placed before audit committee on October 10, and to company's n-executive board members on October 11 (also day when Infosys anunced its second quarter results).

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Independent investigation launched

Nilekani h also said audit committee has retained law firm Shardul Amarchand Mangaldas & Co to conduct an independent investigation into issue. Leing exchange BSE has asked Infosys to explain why it did t make a disclosure about whistleblower complaint. In letter, dated September 20 and signed by Ethical Employees', it was alleged that CEO Salil Parikh as well as Chief Financial Officer Nilanjan Roy engd in forced revenue recognition from large contracts t hering to accounting standards. letter, dressed to board, claimed that recent big deal wins carried negligible margins and that Roy directed certain people to make wrong assumptions to show margins.

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On Tuesday, shares of Infosys plunged over 16% on Tuesday, wiping out Rs. 53,450.92 crore from its market valuation. scrip recovered on Wednesday to close at Rs. 650.75, up 1.16% on BSE. However, on Thursday, it fell up to 1% in early tre on exchange. In 2017, Infosys h witnessed a protracted stand-off between its high-profile founders and previous manment over allegations of governance lapses and issues relating to severance pack doled out to former executives, including ex-CFO Rajiv Bansal.

Following tussle, n CEO Vishal Sikka quit followed by some board members. Infosys co-founder Nandan Nilekani was n brought in as chairman to steer company. Parekh joined company in January last year as CEO. Infosys has also settled with Sebi case of alleged disclosure lapses regarding a payment me to Bansal.

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