InvestorQ : Can you tell me about the lawsuit that is being filed against HDFC Bank in the US?
Arusha Ray made post

Can you tell me about the lawsuit that is being filed against HDFC Bank in the US?

Answer
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diksha shah answered.
2 months ago


It really does not look like anything serious. In fact, it is a US law firm by the name of Rosen which plans to file a lawsuit against HDFC Bank. The allegation is that HDFC Bank misled investors with inadequate information that resulted in huge losses to equity investors.

Since HDFC Bank ADRs are traded on the NYSE, It does come under the US-SEC regulations. However, such lawsuits are normally pressure tactics to make companies compensate for stock market losses. Something similar was attempted in the case of Infosys also.

It maybe recollected that, in the case of Infy, a bunch of US lawyers had brought a similar class action lawsuit against Infosys. However, the basis was quite weak and there was little that could be proved so the case was finally disposed of by the SEC.

The good news for HDFC Bank is that such cases are normally hard to prove in court and used more as pressure tactics by the lawyers. HDFC Bank has already dismissed the lawsuit as frivolous and has assured that it would not cause any collateral damage for the bank.