Wipro to pay US regulator $5 mn to settle $4 mn employee fraud
23 Dec 2016
Wipro Ltd, India's third-largest software firm, said it had reached a $5-million civil deal with the US market regulator Securities and Exchange Commission (SEC) to settle a six-year investigation over alleged securities Act violation by the company.
The SEC investigation related to the embezzlement of funds worth $4 million by an employee. Under the terms of the settlement, the company will pay a penalty of $5 million.
In a filing with the Bombay Stock Exchange, the Bengaluru-based IT major, however, said, "in agreeing to the settlement, the company neither admits nor denies the SEC's allegations that the company violated certain provisions of the Securities Exchange Act of 1934".
The matter relates to embezzlement of funds worth about $4 million by an employee which Wipro says it discovered in December 2009. Wipro said that it was able to substantially recover the embezzled funds and made appropriate disclosures in the matter. The US agency initiated an enquiry in September 2010.
Wipro said that upon discovery of the embezzlement, it immediately took several steps, which included internal and external investigation, hiring of additional accounting and finance personnel and spotting the recommendations of auditors and consultants.
"The company believes that it is in its best interests and that of all the stakeholders to resolve the prolonged matter and has accordingly reached the settlement," Wipro said.
''The company considers the settled resolution of this long-pending matter to be an efficient approach and in the best interests of the company and its investors to avoid the cost associated with a prolonged litigation,'' said the statement.
''The SEC has credited the company's cooperation and remedial measures in arriving at the settlement. Under the terms of the settlement, company consents to pay a civil money penalty of $5 million, to cease and desist from committing or causing violations of the Exchange Act, and to undertake certain follow through actions.''
''The company is pleased to formally resolve and put this six-year-old matter behind it,'' it said.