SEC investigates India’s Infosys on whistleblower complaints

By Reuters Last updated Oct 24, 2019

FILE PHOTO: An employee walks past a signage board in the Infosys campus at the Electronics City IT district in Bangalore, February 28, 2012. REUTERS/Vivek Prakash

BENGALURU (Reuters) – Infosys Ltd (NS:INFY) (N:INFY) on Thursday said the U.S. Securities and Exchange Commission (SEC) has launched a probe into whistleblower claims that the Indian software services firm used ‘unethical practices’ to boost revenue and profit.

The company said India’s market regulator, the Securities and Exchange Board of India, has also asked it to submit information concerning the complaints.

Infosys, India’s second-biggest IT services firm by revenue after Tata Consultancy Services Ltd (NS:TCS), on Tuesday said it was investigating claims including that Chief Executive Officer Salil Parekh bypassed reviews and approvals for large deals fearing the negative impact of reduced profit on Infosys’ share price.

It also disclosed claims that Chief Financial Officer Nilanjan Roy prevented employees from highlighting issues around large deals in presentations to the board.

Parekh and Roy declined to comment when contacted through Infosys.

Infosys on Thursday also said a securities class action lawsuit has been filed against it in a U.S. federal court based on the complaints, and that it intends to defend itself “vigorously”.

Infosys shares, which have lost over 15% of their value since the firm disclosed the claims, were largely unchanged in early trade on Thursday.