US-based Rosen Law Firm has filed a class action lawsuit against HDFC Bank, seeking to recover damages for the bank's investors under the US securities laws.
The development comes after the investor rights law firm last month announced an investigation of potential securities claims on behalf of shareholders of HDFC Bank following allegations that the bank may have issued materially misleading business information to investors.
According to the lawsuit, the defendant (bank) throughout the 'Class Period' made false and misleading statements and failed to disclose to investors that it had inadequate disclosure controls and procedures and internal control over financial reporting, as a result of which, the bank maintained improper lending practices in its vehicle financing operations.
Further, earnings generated from the bank's vehicle financing operations were "unsustainable", as per the lawsuit and it added that all the foregoing, once revealed, was foreseeably likely to have a material negative impact on the bank's financial condition and reputation.
The law firm said that the bank's public statements "were materially false and misleading at all relevant times" and when the true details entered the market, investors suffered damages.
In July, reports said that HDFC Bank had conducted an investigation into the "improper lending practices and conflicts of interests" in its vehicle financing arm.