Rosen Law Firm seeks damages from HDFC Bank in class action suit2 min read . Updated: 17 Sep 2020, 04:32 PM IST
- In July, Bloomberg reported HDFC Bank was probing alleged improper lending practices in its vehicle financing arm. It was alleged that the bank had forced its car loan customers to purchase a vehicle tracking device
MUMBAI: Rosen Law Firm, based out of New York, US, has filed a class action lawsuit against HDFC Bank, seeking damages for those investors who suffered losses because of lender's alleged false and misleading statements.
The lawsuit has been filed against HDFC Bank Ltd, outgoing managing director Aditya Puri, CEO-designate Sashidhar Jagdishan, and company secretary Santosh Haldankar. Mint has seen a copy of the complaint available on Rosen Law Firm’s website.
The lawsuit, filed in the United States District Court for the Eastern District of New York, has alleged that the defendants, mentioned above, engaged in a plan, "scheme, conspiracy and course of conduct, pursuant to which they knowingly or recklessly engaged in acts…which operated as a fraud and deceit upon plaintiff and other members of the class."
“This is a federal securities class action on behalf of a class consisting of all persons and entities other than defendants who purchased or otherwise acquired HDFC Bank securities between 31 July 2019 and 10 July 2020, both dates inclusive (class period), seeking to recover damages caused by defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the bank and certain of its top officials," the lawsuit said.
On 13 July, Bloomberg had reported that HDFC Bank is looking into alleged improper lending practices in its vehicle financing arm involving the then business head Ashok Khanna. The allegation was that the bank had forced its car loan customers to purchase a vehicle tracking device.
HDFC Bank’s American depository share (ADS) price had declined $1.37 per share, or 2.83%, to close at $47.02 per share on 13 July.
Today, shares of HDFC Bank fell 0.94% to end at ₹1,083,25 apiece.
The lawsuit also alleged that the bank failed to disclose that it had inadequate disclosure controls and as a result maintained improper lending practices in its vehicle-financing operations. Therefore, the lawsuit said, the bank’s earnings generated from the vehicle-financing operations were unsustainable and all the foregoing, once revealed, was likely to have a material negative impact on the bank's financial condition and reputation.
“As a result, the bank's public statements were materially false and misleading at all relevant times," it said.
The lawsuit alleged that by virtue of their positions at HDFC Bank, the defendants, cited above, had knowledge of the “materially false and misleading statements and material omissions" and intended thereby to “deceive plaintiff and the other members of the class..."
“…or in the alternative, defendants acted with reckless disregard for the truth in that they failed or refused to ascertain and disclose such facts as would reveal the materially false and misleading nature of the statements made, although such facts were readily available to defendants," the complaint said.
An email sent to HDFC Bank remained unanswered.
On 20 July, Mint had reported how car loan customers of the bank were forced to purchase a vehicle tracking device for about four years ended December 2019, in a possible breach of guidelines prohibiting banks from non-financial businesses. HDFC Bank executives pushed auto loan customers to buy GPS devices priced at ₹18,000-19,500 from 2015 to December 2019.
Rosen Law Firm represents investors from across the world, concentrating its practice in securities class actions and shareholder derivative litigation. Last month, the firm had announced an investigation of potential securities claims on behalf of shareholders of the bank.