Class action complaints have been filed in the U.S. District Courts for the Southern District of New York and the Northern District of California. The original complaint alleges that the Company and its two top executives violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing false and misleading financial statements. On January 7, 2009, the Company's Chairman B. Ramalinga Raju sent a letter to the Satyam Board of Directors and the Securities & Exchange Board of India admitting a "multi-year" fraud in which Satyam's financial accounts and disclosures were systematically falsified. According to the letter, Raju admitted to having inflated the amount of cash on the Company's balance sheet by nearly $1 billion, incurring liability of $253 million on funds arranged by him personally, and overstating Satyam's September 2008 quarterly revenues by 76% and profits by 97%. As a result of this disclosure trading in the ADSs was halted, with an estimated indication of a loss being approximately 90% of its value.
On March 13, 2009, District Court Judge Barbara S. Jones granted the motion of the Satyam Investor Group for consolidation of related actions, appointment as lead plaintiff and approval of lead plaintiff's selection of co-lead counsel. The Consolidated Action shall have the following caption: In Re Satyam Computer Services Ltd. Securities Litigation, No. 09-cv-93-BSJ-DFE. The Satyam Investor Group is appointed Lead Plaintiff and the law firms Glancy Binkow & Goldberg LLP and Vianale & Vianale LLP are approved as Co-Lead Counsel for the Class.
On March 16, 2009, Judge Barbara S. Jones issued an Order vacating the Order initially issued on March 13, 2009, granting the motion for consolidation, appointment as lead counsel, and approval of lead plaintiff's selection of co-lead counsel.
On April 28, 2009, Judge Jones issues Pretrial Order No. 1, consolidating several actions into 09-md-02027 (BSJ), under In re Satyam Computer Services, Ltd., Securities Litigation. On May 12, 2009, the Court appointed the Global Institutional Investors Group as lead plaintiff and approved its selection of Grant and Eisenhofer P.A., Bernstein Litowitz Berger & Grossman LLP, Barrow Topaz Kessler & Check LLP, and Labaton Sucharow LLP as co-lead counsel.
On July 17, 2009, the lead plaintiff filed a Consolidated Class Action Complaint. In November and December 2009 and March and May 2010, the defendants filed numerous motions to dismiss. These motions are currently pending before the Court.
According to a news article dated February 18, 2011, in a settlement that has a number of interesting features, Satyam Computer Services, an Indian technology outsourcing company, has agreed to pay $125 million to settle the consolidated securities class action litigation pending against the company in Southern District of New York. The only settling defendant is the company itself, which is now known as Mahindra Satyam. The settlement does not resolve claims against the individual defendants, including certain of the company’s former directors and officers, or against PricewaterhouseCoopers-related entities. The settlement is subject to court approval, as well as other regulatory and governmental approval.
On February 17, 2011, the lead plaintiffs filed a First Amended Consolidated Class Action Complaint.
On March 21, 2011, Judge Barbara S. Jones signed the Amended Preliminary Approval Order. According to the Order, the Court has reviewed the Stipulation and preliminarily finds the Settlement set forth therein to be fair, reasonable and adequate, subject to further consideration at the Settlement Hearing described below. The Settlement Hearing pursuant to Rule 23(e) of the Federal Rules of Civil Procedure is hereby scheduled to be held before the Court on September 8, 2011 at 3:00 p.m. for the purposes as set forth herein.
On April 18, 2011, certain individual defendants filed two motions to dismiss the First Amended Consolidated Class Action Complaint. The defendants filed several more motions to dismiss on April 29 and May 3, 2011. On April 29, 2011, the plaintiffs entered into a settlement with defendant the PwC Entities. The proposed settlement is in the amount of $25.5 million in cash. The proposed settlement was preliminarily approved on May 12, 2011. The Settlement Hearing wss set for September 8, 2011.
On September 13, 2011, Judge Barbara S. Jones signed two Judgments settling the action as to Satyam and the PWC Entities. The Court also granted the two motions for attorney fees.