US-based Rosen Law Firm and Schall Law Firm have filed class action lawsuits against HDFC Bank Ltd alleging the company of making false and misleading statements and for failing to maintain appropriate disclosure controls and internal controls on financial reporting.
The complaint names HDFC Bank, outgoing managing director Aditya Puri, CEO-designate Sashidhar Jagdishan and Company Secretary Santosh Haldankar as defendants.
According to the Rosen lawsuit, defendants throughout the class period made false and/or misleading statements and failed to disclose to investors that HDFC Bank had inadequate disclosure controls and procedures and internal control over financial reporting. As a result, the bank maintained improper lending practices in its vehicle-financing operations, accordingly, earnings generated from the Bank's vehicle-financing operations were unsustainable.
“All the foregoing, once revealed, was foreseeably likely to have a material negative impact on the bank's financial condition and reputation and as a result, the bank's public statements were materially false and misleading at all relevant times,” the complaint said.
When the true details entered the market, the lawsuit claims that investors suffered damages.
According to the Schall Lawsuit, the company made false and misleading statements to the market. HDFC Bank failed to maintain appropriate disclosure controls and internal controls on financial reporting. The Company engaged in improper lending practices in its vehicle financing business. Based on these facts, the Company’s public statements were false and materially misleading throughout the class period. When the market learned the truth about HDFC Bank, investors suffered damages, it said.
The lawsuits are filed on behalf of purchasers of the securities of HDFC Bank between July 31, 2019 and July 10, 2020, inclusive (the Class Period). The lawsuit seeks to recover damages for HDFC investors under the federal securities laws.
When contacted, HDFC Bank denied any further comment on this development. The bank reiterated the statement made on August 17 statement when the investigation into the lawsuits was started saying, “Prima facie it does look frivolous as we believe we have been transparent in our disclosures.”