Former Satyam Computer Services Ltd. directors persuaded a judge to dismiss claims in a U.S. lawsuit over a $1 billion accounting fraud.
U.S. District Judge Barbara Jones in New York yesterday dismissed claims against former members of Satyam’s audit committee and other directors, citing insufficient allegations in the complaint. Yesterday’s ruling in the class action, or group lawsuit, involved only the former board members, not other defendants in the case.
Most allegations in the complaint “concern an intricate and well concealed fraud perpetrated by a very small group of insiders and only reinforce the inference” that some former board members “were themselves victims of the fraud,” Jones said in a 71-page ruling.
Satyam, based in Hyderabad, has been embroiled in India’s biggest corporate fraud probe. Former Chairman Ramalinga Raju disclosed in January 2009 that he overstated assets by more than $1 billion. In 2011, the company agreed to pay $125 million to settle a U.S. shareholder lawsuit alleging securities violations. Other defendants in the lawsuit have also reached settlements.
Steven Singer, a lawyer for the plaintiffs, didn’t return a call after regular business hours yesterday seeking comment on the ruling.
“We are gratified by Judge Jones’s decision,” said Irwin Warren, a partner with the New York firm Weil, Gotshal & Manges LLP who represented five of the seven directors in the case. “It was truly unfortunate that these directors -- diligent individuals of the highest integrity and reputation -- were ever named defendants.”
The case is In Re Satyam Computer Services Securities Litigation, 09-md-2027, U.S. District Court, Southern District of New York (Manhattan).