Has Satyam duped many US investors?

In separate lawsuits filed in US courts, Satyam Computer has been charged with duping thousands of American investors of billions of dollars by artificially inflating share price.

Demanding trial by jury against Satyam Computer, its chairman Ramalinga Raju, managing director and CEO B Rama Raju, the complainants have said that each of them is "liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit..."

The IT firm has also deceived the investing public regarding Satyam's business, its finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices, said the class action suit filed by lawfirm Vianale & Vianale LLP on behalf of shareholders.

Another lawfirm Izard Nobel LLP also filed an identical class action suit on the issue at the US District Court for Southern District of New York.

"A lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs of Satyam Computer between January 6, 2004 and January 6, 2009," Izard Nobel LLP said in a statement.

The class action complaint filed by Vianale & Vianale LLP in Manhattan Federal Court said that there are thousands of such shareholders throughout the US who have been affected by "a series of false and misleading statements, containing materially inaccurate financial information about the company, which served to artifically inflate the value of its ADSs.

Trading on Satyam ADRs was suspended yesterday after it plunged by over 90 per cent to 0.85 dollars in pre-market trade in US following Satyam founder and chairman B Ramalinga Raju's confession to a Rs 7,800 crore fraud in the company.

"When the truth was revealed the company's ADSs lost nearly their entire value and investors lost billions of dollars as a result," the suit filed by Vianale said.

The suits also charged Raju and his brother B Rama Raju with having engaged "in such a scheme to inflate the price of Satyam ADSs in order to 1) protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; and 2) enhance the value of their personal holdings of Satyam stocks."

"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to the Board of Directors yesterday, while announcing his resignation as chairman.

Agencies