An earlier lawsuit filed by Rosen Law Firm alleged that Cognizant lacked effective internal controls over financial reporting, and that as a result of the improper payments related to 12 facilities made in India, the company’s statements about its business, operations and prospects were materially false and misleading and lacked a reasonable basis. When the true details entered the market, the lawsuit claims that investors suffered damage.

On September 30, 2016, in a regulatory filing to SEC and the US department of justice, Cognizant said it was ‘conducting an internal investigation into whether certain payments relating to facilities in India were made improperly and in possible violation of the US Foreign Corrupt Practices Act and other applicable laws.’ The filing said the investigation was being conducted with the oversight of the audit committee, with the assistance of outside counsel, and is currently focused on a small number of company-owned facilities. In the same filing the company said its president Gordon Coburn resigned and in his place Rajeev Mehta, current CEO, IT Services was appointed as president of the company.

Several law firms including Rosen Law Firm, Goldberg Law PC, Brower Piven, Lundin Law PC, Robbins Arroyo LLP, Khang & Khang LLP, Levi & Korsinsky, LLP, Bragar Eagel & Squire, P.C, Law Offices of Howard G. Smith and Kahn Swick & Foti, LLC have initiated investigations and some filing class action law suits against CTS in the past month.

Sources said a team of lawyers from a US firm arrived in Chennai a few weeks before the announcement and were looking into various land deals the company had entered into for setting up development centres. The announcement by Cognizant has come at a time when the company has said its current year revenue growth of 8.5% to 9.5% will be its slowest since 1996.