Securities fraud class action filed on behalf of a class of persons and entities who purchased or acquired the American Depositary Shares (“ADSs”) of Satyam Computer Services, Ltd. (“Satyam” or the “Company”) on the New York Stock Exchange and/or were investors residing in the United States who purchased or acquired Satyam common stock traded on Indian exchanges between January 6, 2004 and January 6, 2009 (the “Class Period”).
On May 12, 2009, the Honorable Barbara S. Jones appointed BLB&G client, the Mississippi Public Employees’ Retirement System, Co-Lead Plaintiff as part of the Global Institutional Investors group, and BLB&G as Co-Lead Counsel. The Global Institutional Investors filed a Consolidated Class Action Complaint (the “Complaint”) in this matter on July 17, 2009.
Lead Plaintiffs Achieve Partial Settlements of $125 million with Satyam and $25.5 million with the PwC Entities
On February 16, 2011, Lead Plaintiffs and Satyam entered into a Stipulation and Agreement of Settlement, pursuant to which these parties agreed to settle all claims asserted by Lead Plaintiffs against Satyam in this Action for $125 million, plus potential additional consideration resulting from claims that Satyam may bring in the future against its auditors. On April 27, 2011, Lead Plaintiffs and Price Waterhouse (Bangalore), PricewaterhouseCoopers Private Limited, Lovelock & Lewes, PricewaterhouseCoopers International Limited, and PricewaterhouseCoopers LLP (collectively, the "PwC Entities") entered into a Stipulation and Agreement of Settlement, pursuant to which these parties agreed to settle all claims asserted by Lead Plaintiffs against the PwC Entities in this Action for $25.5 million.
These settlements are subject to Court approval. Judge Jones has preliminarily approved the proposed settlements, certified a Class for purposes of the settlements and authorized that notice of the proposed settlements to be sent to potential class members. Judge Jones has scheduled a hearing to consider whether to approve the settlements on September 8, 2011.
A copy of the Notice with information about the proposed settlements, including how to determine if you are class member and may be eligible for a payment from the settlements and how to submit a claim, and a copy of the Proof of Claim form are available on the Case Documents page. For additional information about the settlements, you may visit the settlement website at: http://www.satyamsecuritiessettlement.com/.
The Action continues against the remaining defendants in the case.
Background
The Complaint alleges that Satyam, a global information technology outsourcing company headquartered in Hyderabad, India, certain of its directors and officers, and the Company’s outside auditors made false and misleading public statements regarding Satyam’s financial condition and performance, which artificially inflated the prices of the Company’s securities.
On January 7, 2009, Satyam’s Chairman, B. Ramalinga Raju, sent a letter to the Company’s Board confessing to a massive accounting fraud. Raju admitted that the Company’s balance sheet and other public disclosures contained numerous false statements. For example, Raju wrote that as of September 30, 2008, the Company overstated revenue by approximately 22%, and reported cash and bank balances of 53.61 billion rupees, of which 50.4 billion rupees (over one billion U.S. dollars) did not exist. Reports issued since the January 7th confession indicate that Raju likely understated the scope of the fraud, and that he and members of his family have engaged in widespread theft of Satyam’s funds through a complex web of intermediary entities. Many financial commentators refer to this scandal as “India’s Enron.”
The Complaint also asserts claims against PricewaterhouseCoopers International Ltd. and its Indian partners and affiliates. Satyam’s outside auditors from the Indian affiliate of PricewaterhouseCoopers were aware of the fraud, but still certified the Company’s financial statements as accurate. As alleged in the Complaint, a document (the “Charge Sheet”), filed in a Hyderabad court by the Indian Central Bureau of Investigation (the equivalent of the U.S. Federal Bureau of Investigation) detailing charges against numerous Satyam employees and two PricewaterhouseCoopers partners, alleges that the auditors received documentation from Satyam’s banks that showed that the Company’s disclosed assets were greatly overstated. The Charge Sheet further alleges that these auditors received fees from Satyam that were exorbitantly higher than the fees similarly-situated Indian companies paid to their outside auditors; the Central Bureau of Investigation cites these fees as evidence of a “well knit criminal conspiracy” between Satyam and PricewaterhouseCoopers auditors.
The Complaint asserts claims against other defendants as well. In particular, the Complaint alleges that members of the Audit Committee of the Satyam Board of Directors—who were responsible for overseeing the integrity of the Company’s financial statements, the performance and compensation of the outside auditors from PricewaterhouseCoopers, and the adequacy and effectiveness of internal accounting and financial controls—were responsible for the publication of false and misleading public statements due to their extreme recklessness in discharging their duties and their resulting failure to discover and prevent the massive accounting fraud. The Complaint also alleges that Maytas Infra and Maytas Properties (two Indian companies controlled by the Raju family) and Ramalinga Raju’s two sons (who ran the Maytas companies) are responsible for the false and misleading public statements due to their status as controlling persons of Satyam who influenced and controlled the decision-making of the Company.
As alleged in the Complaint, the Defendants’ false and misleading statements concerning Satyam’s financial condition and performance artificially inflated the prices of the Company’s publicly-traded securities during the Class Period, and caused significant damages to investors when the prices of the Company’s securities both in the United States and in India experienced severe declines as a direct result of disclosures regarding Satyam’s true condition.
Most of the defendants moved to dismiss the Complaint on November 9 and 16, 2009, December 16, 2009, and on March 22, 2010. The Lead Plaintiffs filed their oppositions to these motions to dismiss on January 22, 2010 and April 8, 2010. These motions were fully briefed as of April 23, 2010.
