HDFC Bank: A US law firm has filed a class action lawsuit, claiming fraud, againsts HDFC Bank (India’s largest private-sector lender) which is allegedly accused of statutory violations in making false & misleading statements to investors about its business practices, internal controls and vehicle-finance operations.
Rosen Legal filed the suit in the US District Court for the Eastern District of New York against former managing director Aditya Puri, CEO-designate Sashidhar Jagdishan and company secretary Santosh Haldankar. It includes investors that bought HDFC Bank securities from July 31, 2019 to July 10, 2020 — a time which the complaint refers to as the class period.
The complaint mentions that HDFC Bank hid troubles in the vehicle-finance vertical and that it suppressed disclosure of weaknesses in its internal controls and lending practices. The suit alleges those omissions rendered public statements by the bank materially false and misleading, causing an investor loss once the issues were revealed.
The case comes after previous investigation of HDFC’s lending and disclosures raised the interest of some American law firms for potential violations of securities laws. Those probes morphed into formal litigation, leaving HDFC Bank the most recent Indian lender sued by a shareholder in a US courtroom.
TAT submission: HDFC Bank called the allegations frivolous and stated that it had made all disclosures in a transparent manner. The case will now go through the U.S. legal system, where the allegations and evidence will be put to the test; officials said there is no indication that the bank has been proved to have done anything wrong.
The lawsuit comes as new pressure on the bank at a time when Indian firms with foreign investors are increasingly under the limelight of U.S. shareholder-rights firms. HDFC Banks features The case is a legal hurdle but also an image problem that could be a sentiment dampener for investors should the issue acquire momentum.