Two US-based law firms file class action suits against HDFC Bank

Rosen Law filed the suit on September 14 on behalf of investors who purchased HDFC Bank equity between July 31, 2019 and July 10, 2020
US-based Rosen Law Firm and Schall Law Firm have filed class action suits against HDFC Bank alleging misleading public statements and for failing to inform investors about the bank's improper internal controls on vehicle loans. 

The lawsuits, filed in the US District Court Eastern District of New York, named outgoing managing director Aditya Puri, CEO-designate Sashidhar Jagdishan, and company secretary Santosh Haldankar as ‘individual defendants’ and collectively, with the bank, as ‘defendants’.  

Rosen Law filed the suit on September 14 on behalf of investors who purchased HDFC Bank equity between July 31, 2019 and July 10, 2020. Rosen had announced it would file such a lawsuit on September 4, Schall Law Firm also announced such filing on September 8, both for the same period.  

The class action filing on Rosen Law’s website says "throughout the class period, defendants made materially false and misleading statements regarding the bank’s business, operational and compliance policies.” Specifically, the bank “made false and/or misleading statements and/or failed to disclose” that it had “inadequate disclosure controls and procedures and internal control over financial reporting.” 

As a result, HDFC Bank maintained “improper lending practices in its vehicle-financing operations," and thus, the earnings generated from HDFC Bank's vehicle-financing operations were unsustainable.  

"All the foregoing, once revealed, was foreseeably likely to have a material negative impact on HDFC Bank's financial condition and reputation; and … as a result, HDFC bank's public statements were materially false and misleading at all relevant times,” which lead to investors suffering damages.  

The lawsuit pointed out that the bank’s American Depositary Share fell $1.37 per share, or 2.83%, to close at $47.02 per share on July 13 after it was reported in media that the bank was probing its lending practice in the vehicle financing operations involving the unit’s former head Ashok Khanna. Investors who had acquired the shares “at artificially inflated prices during the class period” suffered “significant losses and damages," after the revelation. 

HDFC Bank wasn’t immediately available for comment. The shares of the bank fell 0.94 per cent to close at Rs 1083.25 a piece on BSE. 


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel