HDFC Bank Faces Lawsuit For False, Misleading Statements; Case Filed In US
Rosen Law Firm and Schall Law Firm, US-based law firms have sued HDFC Bank on behalf of HDFC investors for false and misleading statements.
Reason to find out more…
HDFC Bank’s Investors Suffer Huge Losses!
Last month, Rosen Law Firm and Schall Law Firm had announced a launch of an investigation into claims against HDFC Bank and had cautioned about class-action lawsuits.
The law firms have now filed class-action lawsuits in the US District Court, Eastern District of New York, against the HDFC Bank and have sought damages.
The lawsuits name HDFC Bank, its current Managing Director and CEO Aditya Puri, CEO-designate Sashidhar Jagdishan, and company secretary Santosh Haldankar as the defendants.
The statement by Rosen Law Firm reads, “Rosen Law Firm, a global investor rights law firm, announces the filing of a class-action lawsuit on behalf of purchasers of the securities of HDFC Bank between July 31, 2019, and July 10, 2020, inclusive. The lawsuit seeks to recover damages for HDFC investors under the federal securities laws.”
The law firms claim that the bank not only made false misleading statements but also didn’t reveal to the investors that it had inadequate disclosure controls and procedures and also insufficient internal control over financial reporting.
The Rosen Law Firm said, “…as a result, the bank maintained improper lending practices in its vehicle-financing operations; accordingly, earnings generated from the bank’s vehicle-financing operations were unsustainable; all the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Bank’s financial condition and reputation; and as a result, the bank’s public statements were materially false and misleading at all relevant times,”
The lawsuit also claimed that investors suffered damages when the details came to light.
Schall Law Firm has ‘encouraged’ HDFC investors with losses over $100,000 to contact the firm.
The Allegations Against HDFC Bank!
In July, the HDFC Bank had pushed the borrowers to buy a GPS device costing Rs 18,000-19,500 along with the car loan amount.
The investigation that followed led to the firing of employees in the vehicle loan department. This development came to light after the retirement of Ashok Khanna, the former Group Head — automobile loans in early 2020. At that time, HDFC Bank had said in a statement that Ashok Khanna was on an extended period of service and retired on March 31, 2020, as per normal terms of employment.
The lender further said, “The bank has a well-established process of investigating every complaint it receives and takes action as appropriate. In the said instance as well, the bank has followed the due process.”
As per a report by Bloomberg, Experian’s India unit, a consumer credit company, had informed the Reserve Bank of India (RBI) that the HDFC Bank had been late in providing information on its loans, including loan repayments status, of its millions of retail borrowers.
Top Executives Leave HDFC Bank; New Management Team By Year-End?
On July 18, Aditya Puri at the annual general meeting had said top executives like Munish Mittal, Chief Information Officer, Abhay Aima, Group Head of Private Banking, and Ashok Khanna have left. Puri himself is retired on October 26, 2020.
According to the Hindu Businessline, HDFC Bank is set to change the top management over the next few months. Sashidhar Jagdishan will be the next Managing Director and CEO of HDFC Bank.