Want to be a
Soolegal Member
Team SoOLEGAL
22 Jul 2020 4:45pm

Lawsuit filed against board members and key Executives of Cognizant by former employee

0
0
3
0

An ex-employee of IT services provider Cognizant has filed a lawsuit against current and former board members as well as key executives for allegedly misleading shareholders regarding a bribery scandal in India.

This lawsuit has been filed by Ravindra Guyyala in the US District Court of Delaware and it follows a separate ongoing securities class-action lawsuit filed by the shareholders of Cognizant. It has been alleged that the company did not mention the bribery to the shareholders.

The defendants in the petition are former CEO Francisco D'Souza, current CFO Karen McLoughlin, former President Gordon Coburn, and former Chief Legal Officer Steven E Schwartz and board members including current CEO Brian Humphries.

Ravindra Guyyala, a common stock owner of Cognizant and currently based in Little Rock, Arkansas, as per his profile on LinkedIn alleged that the executives and board members have breached their duties by issuing false, misleading statements and omitting vital information in the company’s public filings about the bribe payments to get approval for the construction of the new campus in Chennai.

Cognizant allegedly authorized a contractor to pay $2 million bribe to a government official for issuance of a planning permit for its new campus in the South India City of Chennai, in 2014. The payment with a scheme to conceal $2.5 million as reimbursement to the contractor was authorized by 2 senior executives of Cognizant's US headquarters, as per the US Securities and Exchanges Commission (SEC), who investigated the issue between 2014 and 2016.

Former President Gordon Coburn and some other executives resigned in 2016.

Cognizant settled the charges with the SEC in 2019 without accepting or denying the allegations against it. It agreed to pay disgorgement and prejudgment interest of around $19 million and a penalty of $6 million.

Ravindra's lawsuit states that since the defendants were employees and/or directors of Cognizant they must have had information about the Company's financial prospects and internal controls and would have known about the ongoing issues at the Company.

The petition further says, “The Individual Defendants are liable for damages under Section 10b of the Exchange Act and, if Cognizant were to be held liable in the Securities Class Action, the Individual Defendants would be liable to it for contribution.”

The lawsuit seeks a jury trial, improved corporate governance, payment of compensation to the company and for the shareholders to be allowed to nominate the board members. 


Tagged: Cognizant
Did you find this write-up useful? YES 0 NO 0
Active Members view all

New Members view all