SEC seeks financial data, documents from Infosys for whistleblower probe

The US regulator, the Securities Exchange Commission, has sprung to action just a few days after the whistleblower complaint against Infosys came in alleging complaints of profit inflation, fraudulent accounting, irregularities in large deals and employees being asked to not recognise finance costs. CNBC TV18 learns from sources that SEC has sought critical data and information pertaining to the allegations made in the complaint.

Shares of the IT services major had gotten pummeled in trade on October 22 on the back of these allegations with the scrip falling 16.5 percent to close at Rs 640. The sharp fall in the scrip wiped out Rs 53,450 crore from the company's valuation. On October 21, the audit committee retained the law firm of Shardul Amarchand Mangaldas & Co to conduct an independent investigation. Infosys also published a detailed letter by Nandan Nilekani which gave a detailed timeline of events. It outlined that on October 16 the company was made aware of a letter dated October 3, 2019 which was purportedly written to the office of whistleblower protection program, Washington D.C. This letter refers to the September 20, 2019 complaint, and to emails and voice recordings in support of the allegations. The matter was also discussed by the board on October 11. On October 24, Infosys confirmed that SEC had begun a probe into the complaints by the whistleblower. “The company has been in touch with the Securities and Exchange Commission (SEC) regarding the anonymous whistleblower complaints (Anonymous Complaints) and has learnt that the SEC has initiated an investigation into this matter. The company will cooperate with the SEC’s investigation;” Infosys said in its statement.

CNBC TV18 learns from sources close to the development that SEC has sought financial statements as well as complete audit reports starting April 2017 till date from Infosys. Two sources familiar with the development confirmed that Infosys was cooperating with all the requirements by SEC and is in the process of submitting the data. Not just the statements, sources add that data and documentation pertaining to deal closures and emails and communications within the finance team and communications between the finance team, management and clients had also been sought.