US market regulator focuses on role of auditors in Satyam fraud

The US capital market regulator Securities and Exchange Commission (SEC) has completed its probe into the multi-crore rupee Satyam fraud case in India, especially the role of auditors. A team of the Commission came to India following filing of over a dozen class action lawsuits in the US against the promoters and managers of the IT firm on behalf of investors, who purchased American Depository Shares of the company between January 6, 2004 (the listing date in the US) and January 6, 2009 (the day before Raju’s letter).

In these lawsuits, Satyam Computer, its promoters and management were charged with duping thousands of US investors of billions of dollars by artificially inflating share prices. The SEC team has conducted detailed discussions with the Central Bureau of Investigation, specifically on the role of auditors in the multi-crore rupee scam.

During the discussions, the team looked into particular details about the way accounts were allegedly fudged in the tainted computer firm and also at the role of accounting firms.

The team of US officials also sought details on the role of officials in the alleged manipulations, if any. Satyam was also charged with deceiving the investing public on its business, finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices. Trading on Satyam American Depository Receipts (ADRs) was suspended on January 7, after it fell by over 90 per cent to $0.85 in pre-market trade from $9.35 the previous day. It dipped further to $0.78 on January 12 after trading was resumed.