Chennai, October 6:
Rosen Law Firm, a global investor rights law firm in the US, has filed a class action lawsuit on behalf of purchasers of Cognizant Technology Solutions’ Security from February 25, 2016, through September 30, 2016.
The lawsuit seeks to recover damages for Cognizant investors under federal securities laws, according to information on Law Firm’s Web site.
The action follows the September 30, 2016 announcement by Cognizant that it is conducting an internal investigation into whether certain payments relating to facilities in India were made improperly and in possible violation of the US Foreign Corrupt Practices Act and other applicable laws.
Cognizant said it voluntarily notified the US Department of Justice and US Securities and Exchange Commission and is cooperating with both agencies.
On the same day, the company announced the resignation of its its President, Gordon Coburn.
Following this news, Cognizant’s stock dropped as much as $9.43 per share, or 17.15 per cent, to $45.57 on the Nasdaq during intra-day trading on September 30, 2016. On September 30, in a single day, nearly $4.4 billion in Cognizant’s market capital was wiped out after the investigation was announced. The scrip has slowly clawed back and closed at $50.90 on October 5 with a market cap of $30.70 billion.
Some other law firms, including Faruqi & Faruqi, Khang & Khang, Levi & Korsinsky, Johnson & Weaver, LLP and Goldberg Lawin, have said that they are investigating potential securities fraud in Cognizant, according to information provided by these companies to news wires.
Cognizant’s spokesperson declined to comment. The company had earlier said in a Form 8-k filing to the US SEC that the internal investigation is at an early stage, and that it is not able to predict what action, if any, could be taken by the DOJ, SEC or any governmental authority or the effect of the matter on the company’s results of operations, cash flows or financial position.
The US-based software company has over 75 per cent of its 2.5 lakh employees located in India.
(This article was published on October 6, 2016)
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