US-based Rosen Law Firm on Monday said it is planning to investigate potential securities claims against HDFC Bank following allegations of sharing "materially misleading business information" with investors. HDFC Bank said it was not aware of any lawsuit and prima facie it looked "frivolous as we believe we have been transparent in our disclosures".
"Rosen law firm is preparing a securities lawsuit on behalf of HDFC Bank shareholders," the global investor right law firm said in a statement on its website. Citing some news reports about alleged unfair business practices, and that the lender had also missed analysts' estimates on profits for the first quarter ended June FY21, Rosen Law Firm said it is preparing a securities lawsuit.
The HDFC Bank American Depository Receipt share price fell by 2.83 per cent following the report, it added. The bank's ADRs are listed on the NYSE.
The law firm said it will investigate "potential securities claims on behalf of shareholders of HDFC Bank Ltd resulting from allegations that the bank may have issued materially misleading business information to the investing public". Last year, Rosen Law had prepared a similar class-action suit against IT giant Infosys after a whistleblower had alleged malpractices by a few key management personnel. The suit was dismissed in May this year.
The law firm quoted media reports about allegations of improper practices and conflict of interest in HDFC Bank Ltd's vehicle financing operations, which involved its former unit head. "If you purchased securities of HDFC Bank please visit the firm's website…to join the securities action," Rosen Law Firm said.
The largest Indian private sector lender had posted a 22 per cent rise in its consolidated net profit at Rs 6,927 crore in April-June quarter of the current fiscal year 2020-21. Commenting on the development, HDFC Bank said: "We were unaware of any such development (class action lawsuit) till we heard about it from the media a little earlier today. We are getting details of it. We'll examine it and respond to it as appropriate. Prima facie it does look frivolous as we believe we have been transparent in our disclosures".
The bank said it is an interim response, having learnt about the planned lawsuit from the media this morning. The lender in July launched a probe on vehicle finance lending practices following allegations against the conduct of a key executive in the auto lending business.
The probe on vehicle finance lending practices does not have any bearing on loan book, and will not cause any loss to the bank, HDFC Bank said in mid-July. Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation, according to its website.
Shares of HDFC Bank traded at Rs 1,025 apiece on the BSE, down 0.91 per cent from the previous close.