A new class action lawsuit was filed in the US courts on Friday against Satyam Computer, which already has two more such suits against it there filed on behalf of thousands of investors in the American Depositary Shares of the Indian IT firm.
Law firm Brodsky & Smith LLC today announced that it has filed a class action lawsuit on behalf of all persons who purchased ADSs of Satyam Computer between January 6, 2004 and January 6, 2009.
The class action lawsuit was filed in the United States District Court for the Southern District of New York, where the complaint has alleged that Satyam and its top officials "violated federal securities laws by issuing a series of material misrepresentations to the market, thereby artificially inflating the price of Satyam."
This is the third class action lawsuit filed in the US since Wednesday, when Satyam's founder and chairman Ramalinga Raju resigned after disclosing massive financial irregularities to the tune of over a billion dollar at the company over the years.
In these lawsuits, Satyam Computer has been charged with duping thousands of American investors of billions of dollars by artificially inflating share prices.
Demanding trial by a jury against Satyam Computer, its former chairman B Ramalinga Raju, and managing director and CEO B Rama Raju, the complainants have said that each of them is "liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit..."
The IT firm has also deceived the investing public regarding Satyam's business, its finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices, said the class action suit filed by law firm Vianale & Vianale LLP on behalf of shareholders.
Another law firm Izard Nobel LLP also filed an identical class action suit on the issue at the US District Court for Southern District of New York.
"A lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs of Satyam Computer between January 6, 2004 and January 6, 2009," Izard Nobel LLP said in a statement.
The class action complaint filed by Vianale & Vianale LLP in Manhattan Federal Court said there are thousands of such shareholders throughout the US who have been affected by "a series of false and misleading statements, containing materially inaccurate financial information about the company, which served to artificially inflate the value of its ADSs.
Trading on Satyam ADRs was suspended yesterday after it plunged by over 90 per cent to $0.85 in pre-market trade in the US following Satyam founder B Ramalinga Raju's confession to a Rs 7,800 crore (Rs 78 billion) fraud in the company.
"When the truth was revealed the company's ADSs lost nearly their entire value and investors lost billions of dollars as a result," the suit filed by Vianale said.
The suits also charged Raju and his brother B Rama Raju with having engaged "in such a scheme to inflate the price of Satyam ADSs in order to:
protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; and
enhance the value of their personal holdings of Satyam stocks."
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to the Board of Directors yesterday, while announcing his resignation as chairman.