Not just one, at least nine class-action lawsuits have been filed in the US

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against Satyam Computer Services. And out of those, only one has charged claims against PricewaterhouseCoopers, much to the relief of the Satyam’s audit firm.

This was disclosed by Aron Liang, attorney and a securities and class-action expert working with Cotchett, Pitre & McCarthy. Liang told Financial Chronicle, “The exact amount of the loss will have to be determined by expert economists. However, as a rough analysis, the defendants potentially face well over $500 million in penalties in order to make the injured investors in Satyam ADRs (American Depository Receipts) whole again.”

Liang said the 42-page class-action legal document was significant on more counts than one including for the sheer size of the fraud ($1.4 billion). Explaining the significance of the class action, Liang said, “This is an extreme example of either gross incompetence or conspiratorial involvement by Price Waterhouse in the fraud at Satyam. It is impossible for an auditor who does their job seriously to miss the fact that over 90 per cent of a company’s assets did not exist. Price Waterhouse is therefore just as responsible to Satyam investors as Satyam as a company is.”

Cotchett, Pitre & McCarthy has filed one such class-action complaints on behalf of its client Saji Vettiyil, individually and on behalf of all others similarly situated at the United States District Court, Northern District of California, San Jose Division on January 9 (Case No: C09 00117).

“This complaint seeks to recover for all individuals and investors in Satyam American Depository Receipts (“ADR”) the losses they suffered because of the massive and unprecedented fraud at Satyam… Legally, the complaint brings causes of action under American law, such as the Securities and Exchange Act of 1934, which provides remedies for investors who are deceived by corporations such as Satyam.”

Liang said that complex securities cases of this nature could often take a few years to reach trial. However, more often than not, cases of this nature are settled prior to trial. This case appears to be a relatively straightforward fraud and would likely be ready for trial in an American court within two years.

Liang said that if the defendants lose the case, they will be ordered by the American courts to repay all aggrieved investors the full amount of their losses from acquiring Satyam ADRs. This is a civil case so they will not face any criminal penalties such as jail time. However, the defendants will be ordered to reimburse Satyam investors the full amount of their losses if they lose at trial, Liang said, adding that in the American court system, defendants will have the option of filing an appeal if they lose at trial.