Cognizant Technology Solutions Corporation (CTSH) Shareholder Class Action Alleging Defendants Made Materially False and Misleading Statements to Conceal Bribery Scheme Survives Motion to Dismiss
Investors filed a class action complaint against Cognizant for alleged violations of the Securities Exchange Act of 1934. According to the complaint, Cognizant officials engaged in an illegal bribery scheme by making improper payments to obtain permits and building licenses for some of the company’s facilities in India. In so doing, Cognizant failed to enforce the company’s controls related to real estate and procurement in connection with those facilities, all while falsely assuring investors that the company operated under strict compliance with its anticorruption policy. Further, Cognizant incorrectly allocated the bribes resulting in an overstatement of earnings. On August 8, 2018, Senior U.S. District Court Judge William H. Walls denied in part defendants’ motion to dismiss plaintiff’s complaint, paving the way for litigation to proceed.
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