Shares of HDFC Bank, India’s largest private lender, dipped more than 1% in early trading on Friday following announcements of investigations by three US law firms. The probes are looking into potential violations of federal securities laws by the bank and certain executives, focusing on alleged misleading statements and undisclosed information that could impact investors. These investigations were triggered by a report alleging that HDFC Bank made significant payments to attract deposits, which were reportedly categorized as marketing expenses.
The investigations by the Law Offices of Howard G. Smith, the Law Offices of Frank R. Cruz, and Glancy Prongay Wolke & Rotter were prompted by a report from The Indian Express on May 27. The report claimed that HDFC Bank had made payments amounting to about Rs 45 crore to the Maharashtra State Road Development Corporation to secure institutional deposits. It further alleged that these payments were recorded as marketing expenses, with the bank’s CEO purportedly being aware of the transactions. Consequently, HDFC Bank’s American Depositary Receipts (ADRs) saw a decline of $1.02, or 4.1%, following the publication of the report.
While no securities class action lawsuit has been filed against HDFC Bank at this stage, the investigations are ongoing to assess the need for potential legal action. The law firms are urging investors who suffered losses in HDFC Bank ADRs to come forward and provide relevant information for further evaluation. Despite these developments, HDFC Bank has not issued any official statement to the stock exchanges, NSE and BSE, as of 10:30 am on Friday.
During early trading on the Bombay Stock Exchange (BSE) on Friday, HDFC Bank shares experienced a decline of up to 1.44%. Over the past year, the bank’s stock has dropped by more than 25%, with decreases of nearly 20% in the last six months and approximately 25% year-to-date.
