v v 1`h 273 - class actionsecurities.stanford.edu/.../2013614_f01c_13cv02737.pdf ·...

Case5:13-cv-02737-LHK Document1 Filed06/14/13 Page1 of 26

LiOneIZ Glancy (SON 134180) Michael Goklbg (SBN 188669) Robert V. Piongay (SBN 270796) CIANCYBINKOW & GOLDBERG ILP 1925 CaAryPmkEasl, Suite 2100 Los Ange1es Cifnia 90067 Teiepbene:(310)201-9150 Fmile (310)201-9160

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POMERANTZ GROSSMAN LIUFFORD DAHLSTROM & GROSS LLP Marc I. Gross Jeremy A. Lieberman 600 Third Avenue, 20th Floor New York, New York 10016 Telephone: (212)661-1100 Facsimile: (212) 661-8665 [email protected] [email protected]

Attorneyfor Plaintiff

ASHISH KUMAR JAIN, individually and On Behalf of All Others Similarly Situated,

Plaintiff,

V.

IGATE CORPORATION, PHANEESH MURTHY

ORU3NAL F!LEO

JUN 1 4 2013

RCHARD W. 4Eklcj CLEAK U.S UISTRCT COURT

NORfHFN r:1 TnT CF

POMERANTZ GROSSMAN HUFFORD DAHLSTROM & GROSS LLP Patrick V. Dahlstrom Ten South La Salle Street, Suite 3505 Chicago, Illinois 60603 Telephone: (312) 377-1181 Facsimile: (312) 377-1184 [email protected]

V V 1`h 273 CLASS ACTION

COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS

DEMAND FOR JURY TRIAL

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Defendants.

COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS


1 Plaintiff Ashish Kumar Jam ("Plaintiff'), individually and on behalf of all other persons

2 similarly situated, by his undersigned attorneys, for his complaint against defendants, alleges

3 the following based upon personal knowledge as to himself and his own acts, and information

4 and belief as to all other matters, based upon, inter alia, the investigation conducted by and

5 through his attorneys, which included, among other things, a review of the defendants' public

6 7 documents, conference calls and announcements made by defendants, United States Securities

8 and Exchange Commission ("SEC") filings, wire and press releases published by and regarding

9 iGATE Corporation ("iGATE" or the "Company"), analysts' reports and advisories about the

10 Company, and information readily obtainable on the Internet. Plaintiff believes that substantial 11 12 evidentiary support will exist for the allegations set forth herein after a reasonable opportunity

13 for discovery.

14 NATURE OF THE ACTION 15

1. This is a federal securities class action on behalf of a class consisting of all 16 17 persons other than defendants who purchased or otherwise acquired iGATE securities between

18 March 14, 2012 and May 21, 2013, both dates inclusive (the "Class Period"), seeking to

19 recover damages caused by defendants' violations of the federal securities laws and to pursue

20 remedies under §§ 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 (the

21 "Exchange Act") and Rules lOb-S and 14a-9 promulgated thereunder against the Company and

22 23 certain of its top officials and/or directors.

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2. iGATE offers a range of information technology ("IT") solutions to large and

25 medium-sized organizations using an offshore/onsite model. The Company's services include

26 client/server design and development, conversion/migration services, offshore outsourcing, 27

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COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS -1-


1 I enterprise resource planning package implementation and integration services, and software

2 I development.

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3. The Company claims to have revolutionized the IT and outsourcing market by

4 offering an outcome-based pricing model to customers as opposed to the industry's traditional

5 hours-based billing model, a strategy created and implemented by Defendant Murthy. Indeed,

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7 Defendant Murthy was critical to the success and future of iGate. Since joining the Company

8 in 2003, first as CEO of iGate Global Solutions (iGate's offshore services subsidiary), and then

9 in 2008, in his role as CEO, Defendant Murthy lead the Company's advances into new markets,

10 and helped capture new customers and create new revenue sources which were previously 11 12 considered unattainable In sum, the Company's future prospects were particularly dependent

13 on Defendant Murthy's skills, connections, and strategic planning.

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4. Defendant Murthy, however, came to iGate with a checkered past. In his

15 previous role as an executive at the IT company, Infosys Ltd. ("Infosys"), Murthy was asked to

16 leave after being accused by two subordinates of sexual harassment.

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18 5. In order to protect itself from the shenanigans which landed Murthy in trouble at

19 Infosys, the Company established various codes of conduct, some of which were publicly

20 posted on its website, to combat sexual harassment as well as promote a professional work

21 environment. One such policy required employees to report any relationships with subordinate

22 employees. In addition, the Company's policy stated that, "the organization will tolerate no

23 24 form of harassment. . . [and] sexual harassment deserves a special mention here. Unwelcome

25 sexual advances, request for sexual favours, and other physical, verbal, or visual conduct based

26 on sex, constitute sexual harassment. . . [n]o supervisor is to threaten or suggest, either

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1 I explicitly or implicitly, that an employee's refusal or willingness to submit to sexual advances

2 will affect the employee's terms or conditions of employment."

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6. Throughout the Class Period, Defendants made materially false and misleading

4 statements regarding the Company's business, operational and compliance policies. 5 RV Specifically, Defendants made false and/or misleading statements and/or failed to disclose that:

7 (i) the Company's Chief Executive Officer and President was involved in an improper

8 relationship with a subordinate employee in violation of iGATE' s explicit policies to the

9 contrary; and (ii) Murthy' s improper conduct created a risk that he would be terminated from

10 the Company, jeopardizing the Company's future success. 11

12 7. On May 20, 2013, the Company disclosed that its Board of Directors terminated

13 the employment of President and CEO Phaneesh Murthy, effective immediately, after an

14 internal investigation revealed that Murthy had a relationship "with a subordinate employee and

15 a claim of sexual harassment" in violation of iGATE's company policies and Murthy's

16 employment contract.

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18 8. On this news, iGATE securities declined $1.58 per share or nearly 10%, to close

19 at $14.82 per share on May 21, 2013.

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9. On May 22, 2013, the Company further revealed that the termination of the

21 CEO was "for cause,' and Mr. Murthy is not entitled to severance payment under the terms of

22 his Employment Agreement with the Company."

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24 10. In response to his termination, Defendant Murthy acknowledged that he had a

25 personal relationship with a Company employee, which was against company policy, "[i]t was

26 a personal relationship. The company policy states that any two employees having a

27 relationship have to inform the superiors." 28



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11. On this news, iGATE securities declined an additional $0.64 per share or more

2 than 4%, to close at $14.18 per share on May 22, 2013.

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12. The iGate employee who filed a sexual harassment claim against Defendant

4 I Murthy, Araceli Roiz ("Roiz"), was the Company's former head of investor relations, and

5 according to media reports, was afforded special privileges, including joining Murthy in five

6 7 star accommodations while on business trips. Moreover, the reports claim that Roiz is bearing

8 Murthy's unborn child. According to reports, Murthy's inappropriate relationship with Roiz

9 was well known throughout the Company during the Class Period.

10 13. As a result of defendants' wrongful acts and omissions, and the precipitous

11 12 decline in the market value of the Company's securities, Plaintiff and other Class members

13 have suffered significant losses and damages.

14 JURISDICTION AND VENUE 15

14. The claims asserted herein arise under and pursuant to Sections 10(b), 14(a) and 16 17 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b), 78n(a) and 78t(a)) and Rule lOb-S and 14a-9

18 promulgated thereunder (17 C.F.R. § 240.1Ob-5, 17 C.F.R. § 240.14a-9).

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15. This Court has jurisdiction over the subject matter of this action pursuant to § 27

20 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331.

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16. Venue is proper in this District pursuant to §27 of the Exchange Act, 15 U.S.C. 22 23 §78aa and 28 U.S.C. §1391(b), as iGATE's principal place of business is located within this

24 District.

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17. In connection with the acts, conduct and other wrongs alleged in this Complaint,

26 defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, 27

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1 including but not limited to, the United States mail, interstate telephone communications and

2 the facilities of the national securities exchange.

3 PARTIES

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18. Plaintiff, as set forth in the attached Certification, acquired iGATE securities at 5 6 artificially inflated prices during the Class Period and has been damaged thereby.

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19. Defendant iGATE is a Pennsylvania corporation with its principal executive

8 offices located at 6528 Kaiser Drive, Fremont, CA 94555. iGATE's common stock trades on

9 the NASDAQ under the ticker symbol "IGTE." 10

11 20. Defendant Phaneesh Murthy ("Murthy") was the Company's Chief Executive

12 Officer ("CEO") and President between April 1, 2008 and May 20, 2013. Defendant Murthy

13 was a director on the Company's Board of Directors ("Board") between March 7, 2006 and

14 May 20, 2013.

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16 SUBSTANTIVE ALLEGATIONS

17 Background

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21. iGATE provides full-spectrum consulting, technology and business process

19 outsourcing, and product & engineering solutions. Specifically, iGATE provides services that

20 include application development and management, verification & validation, enterprise 21 22 application solutions, infrastructure management, customer interaction services & business

23 process outsourcing, product & engineering solutions, and business & technology consulting.

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Materially False and Misleading

25 Statements Issued During the Class Period

26 22. On March 14, 2012, the Company filed an annual report for the period ended

27 December 31, 2011 on a Form 10-K with the SEC signed by, among others, the Individual

28 Defendants. where it reiterated the Company's previously reported financial results and



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financial position. In addition, the Form 10-K contained signed certifications pursuant to the

Sarbanes-Oxley Act of 2002 ("SOX") by the Individual Defendants stating that the financial

I information contained in the Form 10-K was accurate, and disclosed any material changes to

I the Company's internal control over financial reporting.

23. The Form 10-K represented the following concerning the Company's

Leadership:

Our success is highly dependent on the efforts and abilities of our Chief Executive Officer, Phaneesh Murthy, and our senior management team. This senior management team includes well-known thought leaders in IT-enabled services and all members have significant experience with the onsite/offshore delivery model we employ.

24. On March 16, 2012, the Company filed a proxy statement on a Form 14A with

the SEC where it discussed the Company's Corporate Governance Guidelines and Code of

Conduct. Specifically, the Form 14A represented that the Company's Board of Directors "has

adopted a set of Corporate Governance Guidelines" and "has adopted a Code of Conduct,

which serves as the Company's code of ethics applicable to all employees and to the

independent directors with regard to their Company-related activities."

25. The Company's Code of Conduct Policy states the following in relevant part:

This Code of Conduct applies equally to all directors, officers and employees. . .The Board of Directors has approved, and senior management strongly endorses, this Code of Conduct and its strict enforcement. Each supervisor has the following important roles in implementing this Code of Conduct:

• to lead by example, complying with this Code of Conduct personally and demanding compliance in his or her work area; and

• to listen carefully and act responsively in the event that an alleged violation of this Code of Conduct is brought to his or her attention.



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Our people are our greatest asset. Our dealings with our fellow employees, supervisor and subordinate alike, are based upon mutual trust and respect. Please act for the purpose of facilitating the lawful and ethical success of the Company. Be innovative in problem solving. Facilitate open and honest communications. While it sounds trite, be part of the solution, not part of the problem. It goes without saying that we comply with all applicable laws in all hiring decisions and in our conduct while on the job.

The Company's Corporate Governance Guidelines stated the following in

In addition to its general oversight of the business and affairs of the Company, the Board also performs a number of specific functions, including:

a. selecting, evaluating and compensating the Chief Executive Officer and President and overseeing Chief Executive Officer and President succession planning;

b. providing counsel and oversight on the selection, evaluation, development and compensation of senior management;

c. reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions;

d. assessing major risks facing the Company and reviewing options for their mitigation; and

e. ensuring that processes are in place for maintaining the integrity of the Company, the integrity of the financial statements, the integrity of compliance with law and ethics, the integrity of relationships with customers and suppliers, and the integrity of relationships with other stakeholders.

In addition to the duties of care and loyalty imposed by law, each Director has the following responsibilities:

Each Director will be familiar with, and will comply with, the terms of the Company's Code of Conduct Policy, including applicable rules regarding trading in the Company's securities.

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27. Moreover, during the Class Period, the Company published additional materials

on its website regarding iGate's policies, including the "Code of Conduct and Ethics

Applicable to Employees, Officers, Executive Directors and Whole Time Directors of the

Company" (the, "Code of Conduct and Ethics"). The Code of Conduct and Ethics states:

The organization will tolerate no form of harassment including harassment for race, caste, religion, spiritual beliefs, disability, age, or gender by management and supervisory staff, co-workers, employees, customers, vendors, business associates and non-employees [over whom the Organization exercises some measure of direct control] on or off Organization premises. No verbal or physical conduct by any employee, that harasses, disrupts, or interferes with another's work performance or that creates an intimidating, offensive, or hostile environment, will be tolerated.

Sexual Harassment deserves a special mention here. Unwelcome sexual advances, request for sexual favours, and other physical, verbal, or visual conduct based on sex, constitute sexual harassment when these acts are unilateral, whether intentional or unintentional, and unwelcome by the other person. A conduct will be deemed as sexual harassment if:

The harasser, either implicitly or explicitly suggests career advancement or other work related favours if the one harassed submits to his/her advances.

Conduct has a purpose or effect of unreasonably interfering with the individual's performance or creating an intimidating, hostile or offensive work environment.

No supervisor is to threaten or suggest, either explicitly or implicitly, that an employee's refusal or willingness to submit to sexual advances will affect the employee's terms or conditions of employment.

Other sexually harassing or offensive conduct in the workplace that can be called sexual harassment includes:

Unwanted physical contact or conduct of any kind, including sexual flirtations, touching, advances, or propositions.

Verbal harassment of a sexual nature, such as lewd comments, sexual jokes or references, and offensive personal references.


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Demeaning, insulting, spreading rumours about lewd behaviour, intimidating, or sexually suggestive comments about an individual.

The display in the workplace of demeaning, insulting, intimidating, or sexually suggestive objects, pictures, or photographs.

Demeaning, insulting, intimidating, or sexually suggestive written, recorded, or electronically transmitted messages, including e-mails and SMS that are not appreciated by the receiver.

Physical confinement against one's will and any other act likely to violate ones dignity and privacy.

Any other instance of sexual harassment as may be defined under the local laws of the land where such offence may have been committed.

(Emphasis Added)

28. On March 18, 2013, the Company filed an annual report for the period ended

I December 31, 2012 on a Form 10-K with the SEC signed by, among others, Murthy which

reiterated the Company's previously reported financial results and financial position. In

addition, the Form 10-K contained signed certifications pursuant to SOX by the Individual

Defendants stating that the financial information contained in the Form 10-K was accurate, and

disclosed any material changes to the Company's internal control over financial reporting.

29. The Form 10-K represented the following concerning the Company's

Leadership:

The efforts and abilities of our Chief Executive Officer, Phaneesh Murthy, and our senior management team have contributed greatly to our success. Our senior management team includes well-known thought leaders in IT-enabled services and all members have significant experience with the onsite/offshore delivery model we employ.

30. On March 26, 2013, the Company filed a proxy statement on a Form 14A with

the SEC where it discussed the Company's Corporate Governance Guidelines and Code of

Conduct. Specifically, the Form 14A represented that the Company's Board of Directors "has



adopted a set of Corporate Governance Guidelines" and "has adopted a Code of Conduct,

which serves as the Company's code of ethics applicable to all employees, including its

principal executive officer, principal accounting officer or controller, and any other persons

performing similar functions, as well as to the independent directors with regard to their

Company-related activities."

31. The statements referenced in IT 23-30 above were materially false and/or

misleading because they misrepresented and failed to disclose the following adverse facts,

which were known to defendants or recklessly disregarded by them, including that: (i) the

Company's Chief Executive Officer and President was involved in an improper relationship

with a subordinate in violation of iGATE's stated policies; and (ii) Murthy's improper conduct

jeopardized his tenure at the Company, creating a risk to the Company's future financial

prospects.

THE TRUTH EMERGES

32. On May 20, 2013, the Company issued a press release disclosing "that its Board

of Directors has decided to terminate the employment of President and CEO Phaneesh

Murthy," effective immediately. Further, the Company disclosed the following:

The Board's decision was made as a result of an investigation by outside legal counsel, engaged by the Board, of the facts and circumstances surrounding a relationship Mr. Murthy had with a subordinate employee and a claim of sexual harassment. The investigation, which is ongoing, has reached the finding that Mr. Murthy's failure to report this relationship violated iGATE's policy, as well as Mr. Murthy's employment contract.

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COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS _10-

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33. On this news, iGATE securities declined $1.58 per share or nearly 10%, to close

at $14.82 per share on May 21, 2013.

34. On May 22, 2013, during a teleconference call with the media, Defendant

Murthy admitted that he had violated the company's explicit policies. Specifically, Defendant

I Murthy revealed the following:

Recently I learnt that a lady Araceli Roiz, who is investor relations head of iGate, filed charges claiming sexual harassment against me with the company. The charges are completely false but pursuant to a relationship I had with her, the company thought it fit to believe I violated the company's policy and terminated my employment. The charges were filed few days ago with a letter going to the company related to a relationship I had for the past few months.

***

It was a personal relationship. The company policy states that any two employees having a relationship have to inform the superiors.

It is a small note in an employee handbook. I did inform the company about the relationship. Though it was a question of timing from my side as I disclosed this only a few weeks ago, only after the relationship was over. I do not know what the charges are, as the letter went directly to the company.

35. On May 22, 2013, the media started to investigate the events surrounding

Defendant Murthy's termination. Specifically, Financial Express reported several news

articles about the recent revelations. In one article entitled, Financial Express stated the

following in relevant part:

It's déjà vu for Phaneesh Murthy, as he rushed in to try and defend himself once again against sexual harassment charges, hours after the board of directors of iGate Corporation terminated his employment.

COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS - 11 -

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An lIT-TIM alumnus, Murthy rose through the ranks of Infosys to become the head of its global operations. The 49-year-old techie-turned business executive, however, fell from grace in 2002 when Infosys forced him quit the company after a charge of sexual harassment by his personal assistant.

36. In a follow-up article, Financial Express reported the following in relevant part:

iGate chief executive Phaneesh Murthy's exit from the company has placed the promising IT major under a cloud with regard to its future, considering that the man in question was its strategic decision maker who was busy putting together a business model that he claimed would threaten other Indian IT vendors.

iGate, a US company with significant presence in India, has appointed Gerhard Watzinger as the interim head with the search on for a full time executive. The task before the new CEO would be very challenging as the company would have to address many concerns ranging from corporate reputation, customer acquisition and stock market performance, according to analysts and industry observers.

Now, with the departure of Murthy who was instrumental in driving iGate's outcome-based pricing model, the company faces a tough task of hunting for new customers. An analyst who did not wish to be identified said, "Murthy's exist will impact the company when they go for new customer acquisition as he was the face of the firm."

Murthy had built an image of being larger than life with the avowed aim of taking on the big boys of the Indian IT industry. This has possibly made the task of finding a new successor a bigger challenge for iGate. Last year, iGate under the leadership of Murthy had unleashed an aggressive multimedia campaign targeted at large corporations in North America in order to shift the outsourcing model from an efforts-based model to a strategic results-based approach.

Mukherji of Avasant said, "Going by his profile, Murthy did not allow anybody else to become the face of the organization. He was a great marketing guy and he always cashed in on it."


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37. On May 22, 2013, the Company filed a Form 8-K with the SEC disclosing the

following:

On May 20, 2013, Phaneesh Murthy was terminated as Chief Executive Officer and President of iGATE Corporation (the "Company"), effective immediately. This termination was "for cause", and Mr. Murthy is not entitled to severance payment under the terms of his Employment Agreement with the Company.

38. On this news, iGATE securities declined an additional $0.64 per share or more

Ithan 4%, to close at $14.18 per share on May 22, 2013.

PLAINTIFF'S CLASS ACTION ALLEGATIONS

39. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or

otherwise acquired iGATE securities during the Class Period (the "Class"); and were damaged

I thereby. Excluded from the Class are defendants herein, the officers and directors of the

Company, at all relevant times, members of their immediate families and their legal

representatives, heirs, successors or assigns and any entity in which defendants have or had a

controlling interest.

40. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, iGATE securities were actively traded on the

NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and

can be ascertained only through appropriate discovery, Plaintiff believes that there are hundreds

or thousands of members in the proposed Class. Record owners and other members of the

Class may be identified from records maintained by iGATE or its transfer agent and may be

notified of the pendency of this action by mail, using the form of notice similar to that

customarily used in securities class actions.

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COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS - 13 -

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41. Plaintiffs claims are typical of the claims of the members of the Class as all

members of the Class are similarly affected by defendants' wrongful conduct in violation of

I federal law that is complained of herein.

42. Plaintiff will fairly and adequately protect the interests of the members of the

I Class and has retained counsel competent and experienced in class and securities litigation.

I Plaintiff has no interests antagonistic to or in conflict with those of the Class.

43. Common questions of law and fact exist as to all members of the Class and

I predominate over any questions solely affecting individual members of the Class. Among the

I questions of law and fact common to the Class are:

• whether the federal securities laws were violated by defendants' acts as alleged herein;

• whether statements made by defendants to the investing public during the Class Period misrepresented material facts about the business, operations and management of iGATE;

• whether the Individual Defendants caused iGATE to issue false and misleading financial statements during the Class Period;

• whether defendants acted knowingly or recklessly in issuing false and misleading financial statements;

• whether the prices of iGATE securities during the Class Period were artificially inflated because of the defendants' conduct complained of herein; and

• whether the members of the Class have sustained damages and, if so, what is the proper measure of damages.

44. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual Class members may be relatively small, the expense and

burden of individual litigation make it impossible for members of the Class to individually

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redress the wrongs done to them. There will be no difficulty in the management of this action

as a class action.

45. Plaintiff will rely, in part, upon the presumption of reliance established by the

I fraud-on-the-market doctrine in that:

• defendants made public misrepresentations or failed to disclose material facts during the Class Period;

• the omissions and misrepresentations were material;

• iGATE securities are traded in an efficient market;

• the Company's shares were liquid and traded with moderate to heavy volume during the Class Period;

• the Company traded on the NASDAQ and was covered by multiple analysts;

• the misrepresentations and omissions alleged would tend to induce a reasonable investor to misjudge the value of the Company's securities; and

• Plaintiff and members of the Class purchased, acquired and/or sold iGATE securities between the time the defendants failed to disclose or misrepresented material facts and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts.

46. Based upon the foregoing, Plaintiff and the members of the Class are entitled to

a presumption of reliance upon the integrity of the market.

COURT I

(Against All Defendants For Violations of Section 10(b) and Rule lOb-5 Promulgated Thereunder)

47. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

48. This Count is asserted against defendants and is based upon Section 10(b) of the

Exchange Act, 15 U.S.C. § 78j(b), and Rule lOb-5 promulgated thereunder by the SEC.

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1 49. During the Class Period, defendants engaged in a plan, scheme, conspiracy and

2 course of conduct, pursuant to which they knowingly or recklessly engaged in acts,

3 I transactions, practices and courses of business which operated as a fraud and deceit upon

4 I Plaintiff and the other members of the Class; made various untrue statements of material facts

5 I and omitted to state material facts necessary in order to make the statements made, in light of

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7 I the circumstances under which they were made, not misleading; and employed devices,

8 I schemes and artifices to defraud in connection with the purchase and sale of securities. Such

9 I scheme was intended to, and, throughout the Class Period, did: (i) deceive the investing public,

10 I including Plaintiff and other Class members, as alleged herein; (ii) artificially inflate and 11

12 I maintain the market price of iGATE securities; and (iii) cause Plaintiff and other members of

13 the Class to purchase or otherwise acquire iGATE securities and options at artificially inflated

14 prices. In furtherance of this unlawful scheme, plan and course of conduct, defendants, and

15 each of them, took the actions set forth herein.

16 50. Pursuant to the above plan, scheme, conspiracy and course of conduct, each of

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18 the defendants participated directly or indirectly in the preparation and/or issuance of the

19 quarterly and annual reports, SEC filings, press releases and other statements and documents

20 described above, including statements made to securities analysts and the media that were

21 designed to influence the market for iGATE securities. Such reports, filings, releases and

22 statements were materially false and misleading in that they failed to disclose material adverse

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24 information and misrepresented the truth about iGATE's finances and business prospects.

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51. By virtue of their positions at iGATE, defendants had actual knowledge of the

26 materially false and misleading statements and material omissions alleged herein and intended

27 thereby to deceive Plaintiff and the other members of the Class, or, in the alternative, 28



1 I defendants acted with reckless disregard for the truth in that they failed or refused to ascertain

2 I and disclose such facts as would reveal the materially false and misleading nature of the

3 I statements made, although such facts were readily available to defendants. Said acts and

4 I omissions of defendants were committed willfully or with reckless disregard for the truth. In

5 I addition, each defendant knew or recklessly disregarded that material facts were being

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7 I misrepresented or omitted as described above.

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52. Information showing that defendants acted knowingly or with reckless disregard

9 I for the truth is peculiarly within defendants' knowledge and control. As the Chief Executive

10 I Officer of iGATE, Murthy had knowledge of the details of iGATE's internal affairs.

11

12 53. Murthy is liable both directly and indirectly for the wrongs complained of

13 herein. Because of his position of control and authority, the Murthy was able to and did,

14 directly or indirectly, control the content of the statements of iGATE. As an officer and/or

15 director of a publicly-held company, Murthy had a duty to disseminate timely, accurate, and

16 truthful information with respect to iGATE' s businesses, operations, future financial condition

17

18 and future prospects. As a result of the dissemination of the aforementioned false and

19 misleading reports, releases and public statements, the market price of iGATE securities was

20 artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning

21 iGATE's business and financial condition which were concealed by defendants, Plaintiff and

22 the other members of the Class purchased or otherwise acquired iGATE securities at artificially

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24 inflated prices and relied upon the price of the securities, the integrity of the market for the

25 securities and/or upon statements disseminated by defendants, and were damaged thereby.

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54. During the Class Period, iGATE securities were traded on an active and efficient

27 market. Plaintiff and the other members of the Class, relying on the materially false and

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1 misleading statements described herein, which the defendants made, issued or caused to be

2 disseminated, or relying upon the integrity of the market, purchased or otherwise acquired

3 shares of iGATE securities at prices artificially inflated by defendants' wrongful conduct. Had

4 Plaintiff and the other members of the Class known the truth, they would not have purchased or

5 otherwise acquired said securities, or would not have purchased or otherwise acquired them at

6

7 the inflated prices that were paid. At the time of the purchases and/or acquisitions by Plaintiff

8 and the Class, the true value of iGATE securities was substantially lower than the prices paid

9 by Plaintiff and the other members of the Class. The market price of iGATE securities

10 declined sharply upon public disclosure of the facts alleged herein to the injury of Plaintiff and

11 Class members.

12

13 55. By reason of the conduct alleged herein, defendants knowingly or recklessly,

14 directly or indirectly, have violated Section 10(b) of the Exchange Act and Rule lOb-S

15 promulgated thereunder.

16

56. As a direct and proximate result of defendants' wrongful conduct, Plaintiff and 17

18 the other members of the Class suffered damages in connection with their respective purchases,

19 acquisitions and sales of the Company's securities during the Class Period, upon the disclosure

20 that the Company had been disseminating misrepresented financial statements to the investing

21 public.

22

23 COUNT II

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(Against Murthy and iGATE For Violations of Section 14(a) of the Exchange Act And Rule 14a-9 Promulgated Thereunder)

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26 57. Plaintiff repeats and realleges each and every allegation contained in the

27 foregoing paragraphs as if fully set forth herein.

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1 58. During the Class Period, Murthy caused iGATE to disseminate the false and

2 misleading Proxies specified above, which failed to disclose material facts regarding Defendant

3 Pedersen's pledges of iGATE stock that would have made the statements in the Proxies, in light

4 of the circumstances under which they were made, not misleading. As set forth above, the 5

Proxies omitted to state material facts necessary to make the statements in the Proxies not 6 7 misleading, in violation of Regulation 14a-9.

8

59; The Proxies were reviewed and/or disseminated by the Company's Board of

9 Directors, including Murthy. The Proxies misrepresented and/or omitted material facts,

10 including material information concerning Defendant Murthy's violation of the Company's 11 12 Corporate Governance Guidelines and Code of Conduct. By virtue of their positions within the

13 Company, as well as their personal knowledge of Defendant Murthy' s improper relationship

14 and behaviors, Murthy had a duty to disclose this information in the Proxies.

15 60. Murthy was at least negligent in filing the Proxies with the above-noted

16 materially false and/or misleading statements.

17

18 61. The omissions and false and misleading statements in the Proxies are material in

19 that a reasonable shareholder would have considered them important in deciding how to vote

20 on the various matters set forth in the Proxies for shareholder action. In addition, a reasonable

21 shareholder would view a full and accurate disclosure as significantly altering the "total mix" of 22

information made available in the Proxies. 23

24 62. By reason of the foregoing, the Director Defendants violated section 14(a) of the

25 Exchange Act and SEC Rule 14a-9(a) promulgated thereunder.

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27

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COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS _19-


1 COUNT III

2 (Violations of Section 20(a) of the

Exchange Act Against Murthy) 3

4 Plaintiff repeats and realleges each and every allegation contained in the

5 foregoing paragraphs as if fully set forth herein.

6

64. During the Class Period, Murthy participated in the operation and management

7 of iGATE, and conducted and participated, directly and indirectly, in the conduct of iGATE's

8 business affairs. Because of his senior position, Murthy knew the adverse non-public

9 10 information about iGATE' published representations.

11

65. As an officer and/or director of a publicly owned company, Murthy had a duty

12 to disseminate accurate and truthful information with respect to iGATE's compliance with its

13 stated Company policies and to correct promptly any public statements issued by iGATE which 14 15 had become materially false or misleading.

16 66. Because his position of control and authority as a senior officer, Murthy was

17 able to, and did, control the contents of the various reports, press releases and public filings

18 which iGATE disseminated in the marketplace during the Class Period concerning iGATE's

19 future prospects and compliance with its Code of Conduct. Throughout the Class Period, 20 21 Murthy exercised his power and authority to cause iGATE to engage in the wrongful acts

22 complained of herein. Murthy therefore, was a "controlling person" of iGATE within the

23 meaning of Section 20(a) of the Exchange Act. In this capacity, he participated in the unlawful

24 conduct alleged which artificially inflated the market price of iGATE securities.

25

67. By reason of the above conduct, Murthy is liable pursuant to Section 20(a) of 26 27 the Exchange Act for the violations committed by iGATE.

28



1 PRAYER FOR RELIEF

2 WHEREFORE, Plaintiff demands judgment against defendants as follows:

3

A. Determining that the instant action may be maintained as a class action

4 Rule 23 of the Federal Rules of Civil Procedure, and certifying Plaintiff as the

5 representative;

6

7 B. Requiring defendants to pay damages sustained by Plaintiff and the Class

8 reason of the acts and transactions alleged herein;

9

C. Awarding Plaintiff and the other members of the Class prejudgment and post-

10 judgment interest, as well as their reasonable attorneys' fees, expert fees and other costs; and

11 D. Awarding such other and further relief as this Court may deem just and proper.

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13

DEMAND FOR TRIAL BY JURY

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Plaintiff hereby demands a trial by jury.

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Dated: June 14, 2013 Respectfully submitted,

GLANCYBINKOW & GOLDBERG LLP

By: Lionel Z. Glancy Michael Goldberg Robert V. Prongay 1925 Century Park East, Suite 2100 Los Angeles, California 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 infoglancy1aw.com



1 POMERANTZ GROSSMAN HUFFORD

DAHLSTROM & GROSS LLP Marc I. Gross Jeremy A. Lieberman 600 Third Avenue, 20th Floor New York, New York 10016 Telephone: (212) 661-1100 Facsimile: (212) 661-8665 migrosspomlaw.com [email protected]

POMERANTZ GROSSMAN HUFFORD DAHLSTROM & GROSS LLP

Patrick V. Dahlstrom Ten South LaSalle Street, Suite 3505 Chicago, Illinois 60603 Telephone: (312) 377-1181 Facsimile: (312) 377-1184 [email protected]

Attorneys for Plaintiff

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CERTIFICATION PURSUANT TO FEDERAL SECURITIES LAWS

1. 1, MW H i.( U )' A R ]A make this declaration pursuant to Section 27(a)(2)

of the Securities Act of 1933 ("Securities Act") and/or Section 211)(a)(2) of the Securities Exchange Act of

1934 ("Exchange Act") as amended by the Private Securities Litigation Reform Act of 1995.

2. 1 have reviewed a Complaint against iGATE Corporation. C'iGATE" or the "Company", and

authorize the filing of a comparable complaint on my behalf.

3. I did not purchase or acquire i GATE securities at the direction of plaintiffs counsel or in orderto

participate in any private action arising under the Securities Act or Exchange Act.

4. lam willing to serve as a representative party on behalf of a Class of investors who purchased or

acquired iGATE securities during the class period, including providing testimony at deposition and trial, if

necessary. I understand that the Court has the authority to select the most adequate lead plaintiff in this

action.

5. To the best of my current knowledge, the attached sheet lists all of my transactions in iGATE

securities during the Class Period as specified in the Complaint,

6. During the three-year period preceding the date on which this Certification is signed, I have not

sought to serve as a representative party on behalf of a class under the federal securities laws.

7. 1 agree not to accept any payment for serving as a representative party on behalf of the class as

set forth in the Complaint, beyond my pro rata share of any recovery, except such reasonable costs and

expenses directly relating to the representation of the class as ordered or approved by the Court.


S. I declare under penalty of peijury that the foregoing is true and correct.

Executed 1 1 ? / 2_ca (Date)

(Signature)

Aii KLiA YZ YA i;U

(Type or Print Name)


SUMMARY OF PURCHASES AND SALES

DATE PURCHASE OR NUMBER OF PRICE PER SHARE SALE SHARES

v v 1`h 273 - class actionsecurities.stanford.edu/.../2013614_f01c_13cv02737.pdf ·...

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