Activist body files Rs5,000-crore compensation claim for Satyam investors
11 May 2009
Shareholders of fraud-hit Satyam Computer Services Limited through Midas Touch Investors' Association (MTIA) have approached a consumer court in New Delhi seeking compensation for huge losses incurred on the company's shares.
Satyam has a large shareholder base consisting of institutional investors (mutual funds, FIIs, etc,) and 3 lakh individual retail investors. Collectively investors' wealth to the tune of Rs12,000 crore was eroded in the aftermath of the discovery of the scam.
MTIA has approached the National Consumer Redressal Commission seeking compensation to the tune of Rs4,987.50 crore (about $1 billion) on behalf of three lakh Satyam shareholders, who lost their money when the fraud came to light resulting in the shares crashing from Rs544 in May 2008 to Rs11.50 in January this year. The scrip is now quoted at around Rs45 after Tech Mahindra took a majority stake in the company.
MTIA petition names Satyam's former promoters, ex-independent directors and the ex-auditor, Price Waterhouse, besides the company as respondents liable to pay the compensation.
MTIA has taken inspiration from about six similar suits filed against Satyam by investors in the US. This is the first occasion that shareholders in the country seek compensation for the losses suffered due to fall in share price by approaching a consumer court. Duped shareholders are demanding natural justice against their claim and right to receive compensation for the losses suffered by them due to such fraud.
The consumer court is the only platform which can order compensation for all goods sold, including shares and debentures, if there is a deficiency on the part of the seller, hence MTIA has filed a petition to claim for compensation.
MTIA is a 12-year-old not for profit organisation engaged in protection of investor's interest in the financial sector in India. It seeks redressal of investors problems, corporate misgovernance, lax administration or systemic weaknesses.
MTIA is registered, as an investor protection group, with the Securities and Exchange Board of India (SEBI) and Investor Education & Protection Fund, department of company affairs of the finance ministry.
It gets its resources from the investor education and protection fund maintained by the ministry of corporate affairs
