New-York based Rosen Law Firm has announced an investigation of potential securities claims on behalf of HDFC Bank shareholders based on allegations of sharing “materially misleading business information” with investors.
The law firm said it was preparing a securities lawsuit on behalf of HDFC Bank shareholders in a press release put on its website, and asked HDFC Bank shareholders to join the "securities action".
HDFC Bank's ADRs are listed on the NYSE.
The law firm quoted media reports about allegations of improper practices and conflict of interest in its vehicle financing operations, which involved its former unit head.
“On this news, HDFC Bank's American depositary receipt price fell $1.37 per share, or 2.83%, to close at $47.02 per share on July 13, 2020,” the firm said.
An HDFC Bank spokesperson responded to the story saying, "We were unaware of any such development (class action lawsuit) till we heard about it from the media a little earlier today. We are getting details of it. We’ll examine it and respond to it as appropriate. Prima facie it does look frivolous as we believe we have been transparent in our disclosures."
On July 19, 2020, HDFC Bank reported its financial results for the first quarter of the Bank's 2021 fiscal year, missing analyst estimates with respect to net profit and reporting a deterioration in its asset quality, the law firm claimed.
"Then, on August 6, 2020, the publication The Print reported that in July 2020, Experian Plc's Indian unit had informed the Reserve Bank of India that "HDFC Bank has been late in providing details of its loans, including the repayment status of its millions of retail borrowers" and that "
HDFC Bank’s outgoing MD and CEO Aditya Puri spoke about the allegations of improper practices at its vehicle financing unit at the company Annual General Meeting, saying that internal enquiries brought out no conflict of interest issue.
"The enquiry did bring out another aspect related to personal misconduct exhibited by a set of employees, for which appropriate disciplinary actions have been taken," Puri had said. "Based on internal enquiry findings, appropriate action was taken against a set of employees in the auto loan business segment for their act of personal misconduct. Mr Ashok Khanna, being head rep for the business section, had also participated in the inquiry process.”
Rosen Law Firm, which says it represents investors throughout the globe, and concentrates its practice in securities class actions and shareholder derivative litigation, had last been in the news in India when it said it was preparing a class action lawsuit against Infosys. The lawsuit was dismissed.
CNBC-TV18 has reached out to HDFC Bank for a comment. The story will be updated with its response, if received.