NEW YORK, Jan. 8, 2009 (GLOBE NEWSWIRE) -- The recently disclosed fraud by Satyam Computer Services Ltd., which serves as a back office for one third of the Fortune 500 companies and is one of India's largest outsourcing companies, is of a "horrifying magnitude," according to the Chairman of the Securities and Exchange Board of India.
B. Ramalinga Ragu, Satyam's founder and Chairman, who resigned yesterday, has admitted that he cooked Satyam's books and reported inflated revenues, profits and assets for the Company, while understating its liabilities. He also suggested the involvement in the fraud of his brother, the Company's Managing Director and CEO. The egregiousness of the fraud is evident from the results for the Company's second quarter ended in September 30, 2008. According to Ragu, in that quarter, Satyam reported $555 million in revenues when the actual number was $434 million; $136 million in profit when the correct number was only $12.5 million; and a reported hefty $1.1 billion in available cash, when it had a mere $66 million. Ragu acknowledged that the fraudulent scheme "simply reached unmanageable proportions," which he likened to "riding a tiger, not knowing how to get off without being eaten."
Satyam shares fell 78% in Bombay, while trading in the Company's American Depositary Receipts ("ADRs") has been halted since yesterday.
The Pomerantz firm has commenced an investigation of the scandal on behalf of investor clients, and is exploring the possible claims that can be raised, including under the federal securities laws and focusing on identification of possible defendants in addition to the Ragu brothers, such as outside auditors, and on the location of assets in this country.
Any investors in Satyam's ADRs who have questions or concerns can contact Shaheen Rushd Esq. at Pomerantz Haudek Block Grossman & Gross LLP at 888-476-6529 or 212-661-1100 or srushd@pomlaw.com. Pomerantz has prosecuted securities fraud claims for over 70 years, and is regarded as one of the country's premier class action firms. The firm has offices in New York City, Chicago, Washington, D.C., San Francisco and Columbus, Ohio. Among other accomplishments, the Firm argued the landmark StoneRidge case before the U.S. Supreme Court, which established the contours of third party liability to defrauded investors. It has also served as lead counsel in cases that have recovered hundreds of millions for investors, including cases involving stock market analyst Jack Grubman, Charter Communications, and others. It is presently lead counsel in one of the most egregious stock option backdating cases involving Comverse Technology.