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HDFC Bank denies allegations in class action suits; says will defend 'vigorously'

The lawsuit, which was filed by a single small security holder who seeks to represent a class of the bank’s security holders, is based on allegations that the security holder claims caused a temporary decline in the bank’s ADR stock price in July 2020, the bank said.

September 21, 2020 / 06:34 PM IST
 
 
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HDFC Bank on September 21 said it is aware of a complaint that was recently filed against the bank and its three employees in the United States by US-based law firms and said it will “vigorously” defend the charges.

“The bank denies the allegations and intends to defend itself vigorously in the lawsuit. The bank expects its response to the lawsuit to be due in early 2021,” HDFC Bank said in a statement to exchanges.

“Since the lawsuit is at a premature stage, there is no matter at this point of time which requires disclosure as per Regulation 30 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. We trust this clarifies," the bank said.

So far three US law firms have announced class-action suits against HDFC Bank. These firms -- Rosen Law Firm, Schall Law and Pomerantz LLP -- have alleged that the bank engaged in misleading statements and failed to inform investors about the bank's improper internal controls on vehicle loans.

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“All the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Bank's financial condition and reputation; and (v) as a result, the Bank's public statements were materially false and misleading at all relevant times,” the complaint said, adding, revenues generated from HDFC Bank's auto and commercial vehicle loans are reported as part of the Bank's Retail Banking segment,” Pomerantz LLP said in its complaint.

The lawsuits are filed in the US District Court Eastern District of New York and names HDFC Bank’s outgoing managing director Aditya Puri, and CEO-designate Sashidhar Jagdishan along with other officials. While Rosen Law filed the suit on September 14, Schall Law announced the filing on September 8.

In July, HDFC Bank had sacked at least six employees after an internal investigation found that these employees violated the code of conduct and were found involved in violation of corporate governance practices.

The bank’s internal investigations discovered certain irregularities in the vehicle finance division. Allegedly, some employees of the bank engaged in forced selling of GPS devices to customers bundling these with auto loans.

Moneycontrol News
first published: Sep 21, 2020 03:35 pm

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