US Law firm plans class action suit against Infosys over Sikka resignation

A US law firm, Rosen Law Firm, said it is preparing a class action lawsuit to recover losses suffered by Infosys investors following chief executive Vishal Sikka’s resignation.

The firm says it is investigating potential securities claims on behalf of shareholders of possible “materially misleading business information” to the investing public.

On Friday, Sikka had said he would step down as CEO after three years, following a barrage of allegations made against him, including irregularities in the acquisition of Panaya, an Israeli technology firm. The charges were made by Infosys founder N R Narayana Murthy, who attacked the Infosys board for failing on corporate governance norms.

Rosen Law Firm, an organisation that represents investors from across the world, highlighted Sikka’s claim that the “distractions” over criticism by founders was the primary reason for his resignation from the Indian IT major. The firm claimed it was this development that caused has the loss.

“On August 18, 2017, Infosys announced the resignation of its CEO, Vishal Sikka. Sikka’s resignation comes amid criticism by Infosys’ founders of decisions by Infosys’ board, including executive compensation and severance payouts. Sikka’s resignation letter stated: “Over the last many months and quarters, we have all been besieged by false, baseless, malicious and increasingly personal attacks…This continuous drumbeat of distractions and negativity…inhibits our ability to make positive change and stay focused on value creation.” On this news, shares of Infosys fell sharply during intraday trading on August 18, 2017,” said the firm in a statement.

Infosys shares on the Indian stock exchanges dropped 9.6 per cent wiping out Rs 22,500 crore in market capitalisation on Friday, when the board and Murthy traded charges against each other following Sikka’s exit. On the NYSE, where Infosys is listed, the ADR’s dropped 7.19 per cent, as investors looked to exit the company.