Bronstein, Gewirtz & Grossman, LLC, a law firm, has launched an investigation on whether Nasdaq-listed iGATE Corporation has violated Federal laws.
Purchasers of securities, a kind of financial instrument used for trading have asked Bronstein, Gewirtz & Grossman to investigate whether the company and its executives have violated Federal securities laws. Phaneesh Murthy, who failed to report his relationship with a subordinate, was sacked by the Board on May 21.
SEC rules require the disclosure of material relationships between key board committee members. This resulted in the stock falling 9.63 per cent to $14.82 per share, thereby prompting an investigation. Also, this comes close on the heels of employee Araceli Roiz, who according to reports is planning to sue Murthy for sexual harassment and iGATE too. In an investor call recently, iGATE said that Roiz was on medical leave.
Further, iGATE has said the investigation is ongoing and it has not uncovered any company policy violation. This might impact iGATE’s prospects going forward and analysts have already downgraded the stock over the company’s leadership concerns.
In a note to investors, Wells Fargo analysts said that Murthy’s departure leaves a void in iGATE and since he was heavily involved in sales, his departure may affect the company’s near term growth. Agrees C.K. Guruprasad, Principal ,Global Technology Services, Heidrick & Struggles. “He has to fit in the new shoes well and accepting a new position in this role is difficult for employees. The Board in the meantime will figure out whether he fits into this role.”
iGATE has appointed Gerhard Watzinger, a 51 year old industry veteran who was the CEO of iGate Solutions from 1998-2003 as its interim CEO. According to company data, iGate is currently valued at $1.47 billion and it has a debt of $1.1 billion currently.