In re Cognizant Technology Solutions Corporation Securities Litigation
|Court:||United States District Court, District of New Jersey|
|Class Period:||02/01/2015 - 09/01/2016|
|Case Contacts:||John Rizio-Hamilton, Abe Alexander, Jesse L. Jensen|
This is a securities fraud class action case, pending in the US District Court for the District of New Jersey, brought by a group of institutional investors on behalf of purchasers of Cognizant common stock between February 2015 and September 2016.
The case alleges that Cognizant and certain of its executives violated federal securities laws by making false statements to investors. Specifically, this case alleges that Cognizant and its executives made false statements concealing the fact that the company had made illegal payments to secure favorable land permits – called “SEZ permits” – for its facilities in India. Cognizant has already acknowledged that it improperly paid at least $5 million to Indian officials to obtain favorable land permits, and has admitted that members of the company’s “senior management” participated in making, or ignored, the corrupt payments. On September 30, 2016, when Cognizant publicly disclosed that it was investigating “payments relating to facilities in India were made improperly and in possible violation of the U.S. Foreign Corrupt Practices Act and other applicable laws,” the Company’s stock fell significantly, wiping out $4.4 billion in shareholder value. Notably, the same day Cognizant disclosed its bribery investigation, it also announced the surprise resignation of the Company’s President, Gordon Coburn.
On February 13, 2017, Judge William H. Walls, U.S. District Court for the District of New Jersey, appointed Union Asset Management Holding AG, Amalgamated Bank, and Fire and Police Pension Association of Colorado as Lead Plaintiffs. Bernstein Litowitz Berger & Grossmann LLP is Lead Counsel for the Class, and on April 7, 2017 Lead Plaintiffs filed an Amended Complaint. On August 8, 2018, the Court substantially denied Defendants’ motions to dismiss, sustaining Section 10(b) claims against Cognizant and Section 20(a) claims against Defendant Gordon Coburn, Cognizant’s former President.
Last fall, Defendant Cognizant sought to appeal the motion to dismiss order under 28 U.S.C. 1292(b). Cognizant’s request for an appeal was pending before the Third Circuit when, on February 15, 2019, the U.S. Department of Justice indicted Defendant Coburn and the Company’s former General Counsel, Steven Schwartz, on charges they engaged in a multi-million dollar bribery scheme to obtain planning permits relating to Cognizant’s Indian SEZs. Recognizing that the indictment could moot Cognizant’s attempted appeal, Lead Plaintiffs immediately notified the Third Circuit and renewed their request that it deny Cognizant leave to appeal. On March 6, 2019, the Third Circuit granted Lead Plaintiffs' request and denied Cognizant’s petition for an appeal, though it allowed Cognizant to renew its petition if the District Court refused to allow Lead Plaintiffs to amend the complaint. Lead Plaintiffs filed their amended complaint on April 12, 2019. On July 26, 2019, the case was reassigned to Judge Esther Salas, as Judge Walls passed away earlier that month.
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