Company - - Nov 11,2016
Cognizant Technology Solutions (CTS), headquartered in Teaneck, New Jersey seems to be in deeper trouble as two more lawsuits have been filed against it for allegedly filing false and misleading financial statements about its business.
Holzer & Holzer, LLC, an Atlanta based law firm has alleged that Cognizant has made inappropriate payments to gain building licenses and permits in India. Glancy Prongay and Murray, a law firm from Los Angeles, also filed a class action law suit against Cognizant on behalf of its investors.
These law firms have openly invited investors of Cognizant to discuss their legal rights by December 5, 2016. At the beginning of last month, a lawsuit was filed by Rosen Law Firm, a US based investor rights firm, for recovering damages caused to investors in Cognizant.
All these complaints accuses that the financial statements issued by Cognizant between February 25, 2016 and September 30, 2016 are false and misleading. And when the true statements went burst into the market, investors suffered the ultimate damage.
Following this, Cognizant announced that it is 'conducting an internal investigation relating to certain payments made for facilities in India were improper and in violation of the US Foreign Corrupt Practices Act and other applicable laws’. Post this announcement, company’s President, Gordon Coburn resigned and Rajeev Mehta who is the current CEO, IT services in the company was appointed as the president.
There are several other law firms that have started their initial investigation into the matter. This has resulted in three class action law suits being filed against the company in the past one month.
There was a steep decline in the stocks of Cognizant on 30th of September, as it fell by 17.15%. After the announcement of internal investigation, nearly $4.4 billion in Cognizant’s capital market was also wiped out. The Company has also said that its current revenue growth rate of 8.5% to 9.5% this year, will be the slowest since 1996.