Infosys shares crash after whistle-blowers complain

MUMBAI/BENGALURU: Infosys Ltd on Tuesday scrambled to contain the fallout from allegations of accounting malpractices that sent its shares plunging the most in more than six years by hiring accounting firm EY and law firm Shardul Amarchand Mangaldas & Co. to examine the claims made by whistle-blowers.

In a statement, Infosys chairman Nandan Nilekani said that the company’s audit committee began consultations with internal auditors on terms of reference for an investigation into the allegations after its October 11 board meeting, while law firm Shardul Amarchand Mangaldas was retained on October 21 to conduct a separate independent investigation. To ensure an independent probe, Nilekani said chief executive Salil Parekh and chief financial officer Nilanjan Roy have been recused from this matter. “The board, in consultation with the audit committee, will take appropriate steps based on the outcome of the investigation,” he said.

The move to start an independent investigation comes as investors dumped shares of Infosys. The company lost $7 billion in market value on Tuesday as it plummeted 16.2% to close at ₹643.30, marking its steepest single-day drop since 12 April 2013. The sharp fall in share price was not the only bad news for the Bengaluru-based software services company that is considered to be the gold standard for corporate governance in India.

On Tuesday, New York-based Rosen Law Firm said it is preparing a class action lawsuit to recover losses suffered by Infosys’s shareholders. The company’s American depository receipts had fallen 3.61% to $8.955 on the New York Stock Exchange at 9.55pm (IST).

The law firm said in a statement that it is investigating potential securities claims on behalf of shareholders of Infosys resulting from allegations that the company may have issued “materially misleading business information to the investing public”.