US courts against PricewaterhouseCoopers International (PwC) and an
Indian member firm in relation to the Satyam Computer Services
The scandal emerged on 7 January when Satyam
founder and chair Ramalinga Raju admitted to fraud totalling more
than INR7,000 crore ($1.44 billion). Share prices of Satyam’s
American Depository Receipts (ADRs) plunged 90 percent to 93 cents
before the opening of the New York Stock Exchange on 7 January. The
exchange immediately halted trading on the stock. Satyam’s stock in
India lost near 77 percent in value.
Shareholders have begun legal action to
recover their losses, launching class actions against Satyam;
Ramalinga Raju; Satyam co-founder and former chief executive Rama
Raju; former Satyam chief financial officer Srinivas Vadlamani;
PwC; PwC’s Indian member firm PricewaterhouseCoopers Pvt; and the
Indian firm’s audit arm Price Waterhouse, Satyam’s external auditor
The complaints filed list as plaintiffs
investors who bought Satyam securities in periods between 1 January
2004 and 6 January 2009. The most wide ranging complaint was filed
by solicitors Wolf Haldenstein Alder Freeman and Herz in the
Southern District of New York Court on 22 January.
It seeks damages, interest and costs for
investors who bought Satyam securities on any exchange between 29
January 2004 and 6 January 2009.
The other three actions seek damages only for
investors who bought ADRs of Satyam.
A complaint filed by solicitors Cotchett,
Pitre & McCarthy on 16 January said they believe there are
hundreds of thousands of class members. Three of the complaints
alleged PwC is, as the parent firm of Price Waterhouse, liable for
the acts and omissions of Price Waterhouse. The complaint filed by
Cotchett, Pitre & McCarthy alleged that Price Waterhouse
“apparently missed the fact that over 90 percent of Satyam’s
reported assets were imaginary”.
PwC did not respond to a request for comment
at the time this publication went to print.