BANGALORE, 8 JANUARY 2009 - Law firms Izard Nobel and Vianale & Vianale have filed class action suits in the US on behalf of those who purchased American Depository Receipts (ADRs) of Indian outsourcer Satyam Computer Services.
The lawsuits are among the first legal actions taken against the management of Satyam, which admits fiddling with company accounts to overstate profits. ADRs are U.S.-listed securities that represent shares in a foreign company.
India's securities regulator, Securities and Exchange Board of India (SEBI), has ordered an investigation into Satyam's financial accounting activities, but there has been no legal action taken beyond that. It is a public holiday in India on Thursday on account of a religious festival.
Satyam's chairman B. Ramalinga Raju admitted on Wednesday in a letter to the Bombay Stock Exchange that the company had inflated profits for several years.
Raju's current whereabouts are unknown, a spokeswoman for the company said on Thursday. Local media have speculated that Raju may have gone abroad with a variety of locations cited, including Dubai.
The lawsuit by Izard and Nobel was filed Wednesday in the United States District Court for the Southern District of New York, while the suit filed by Vianale & Vianale is pending in a Manhattan federal court.
Both complaints charge that Satyam and certain executives violated federal securities laws by issuing materially false and misleading statements.
What happens next to Satyam is not clear.
After Raju's letter to the stock exchange became public on Wednesday, Ram Mynampati, a senior Satyam executive took charge as interim CEO. He is scheduled to hold his first press conference later today at Satyam headquarters in Hyderabad.
A meeting of the Satyam Board will be held as scheduled on Saturday, the spokeswoman said. The meeting will likely address the issue of expanding the board which was whittled down after a number of its members quit.
