MUMBAI: Rosen Law Firm, based in New York, USA, has filed a class action lawsuit against HDFC Bank, seeking damages for those investors who suffered losses due to the alleged false and misleading statements of the lender.
The lawsuit has been filed against HDFC Bank Ltd, outgoing CEO Aditya Puri, CEO-designate Sashidhar Jagdishan and company secretary Santosh Haldankar. Mint has viewed a copy of the complaint available on the Rosen Law Firm website.
The lawsuit, filed in the United States District Court for the Eastern District of New York, has alleged that the defendants, named above, participated in a plan, “scheme, conspiracy and course of conduct, by virtue of which they participated knowingly or recklessly in acts … that operated as fraud and deception on the plaintiff and other members of the class. “
“This is a federal securities class action on behalf of a class consisting of all persons and entities other than the defendants who purchased or acquired securities of HDFC Bank between July 31, 2019 and July 10, 2020, both dates inclusive (class period), which seek to recover damages caused by violations of federal securities laws by the defendants and to seek remedies under Sections 10 (b) and 20 (a) of the Act of the 1934 Stock Exchange and Rule 10b-5 promulgated thereunder, against the bank and some of its senior officials, “the lawsuit said.
On July 13, Bloomberg reported that HDFC Bank is investigating alleged improper lending practices in its vehicle finance arm involving then-chief commercial officer Ashok Khanna. The allegation was that the bank had forced its auto loan clients to buy a vehicle tracking device.
HDFC Bank’s US Depository Share (ADS) price had declined $ 1.37 per share, or 2.83%, to close at $ 47.02 per share on July 13.
Today, HDFC Bank shares fell 0.94% to close at ₹1,083.25 each.
The lawsuit also alleged that the bank failed to disclose that it had inadequate disclosure controls and, as a result, maintained inappropriate lending practices in its vehicle financing operations. Thus, according to the lawsuit, the bank’s earnings from the vehicle financing operations were unsustainable and all of the above, once disclosed, would likely have a material negative impact on the bank’s financial condition and reputation.
“As a result, the bank’s public statements were materially false and misleading at all relevant times,” he said.
The lawsuit alleged that by virtue of their positions at HDFC Bank, the defendants, cited above, were aware of the “materially false and misleading statements and material omissions” and intended to “mislead the plaintiff and the other members of the class. … “
“… Or, alternatively, the defendants acted with reckless disregard for the truth, as they failed or refused to determine and disclose facts that would reveal the materially false and misleading nature of the statements made, although such facts were readily available to the accused, “the complaint said.
An email sent to HDFC Bank went unanswered.
On July 20, Mint reported how the bank’s auto loan customers were forced to purchase a vehicle tracking device for about four years through December 2019, in a possible violation of guidelines prohibiting banks from doing business. non-financial. HDFC Bank executives pressured auto loan customers to buy GPS devices at a price of ₹18,000-19,500 from 2015 to December 2019.
Rosen Law Firm represents investors around the world, concentrating his practice in securities class action and shareholder derivative litigation. Last month, the firm had announced an investigation of possible securities claims on behalf of the bank’s shareholders.
.
