Cognizant Technology settles stockholder derivative case

By Greg Peters • Saturday, July 11 10:49 • Permanent Link

Cognizant Technology Solutions has reached a proposed settlement in a stockholder derivative case that would send money back to the company rather than to shareholders.

The settlement follows litigation filed in June 2021 and centers on claims that current and former officers and directors breached fiduciary duties, wasted corporate assets, were unjustly enriched and violated federal securities laws. The plaintiff alleged the company was damaged by conduct tied to Foreign Corrupt Practices Act issues, false statements and share repurchases at allegedly excessive prices.

The proposed deal comes after years of procedural fighting. Cognizant’s board first received a demand letter on April 29, 2019. The board sent that demand to a Demand Review Committee, which rejected it in June 2019. The plaintiff then pursued books-and-records litigation in Delaware and later filed the derivative suit in federal court on June 1, 2021.

The case survived early dismissal efforts. On Nov. 30, 2022, the court denied motions to dismiss without prejudice and ordered limited discovery into whether the board wrongfully refused the demand. Discovery disputes continued through 2023 and 2024, including privilege-log fights and revised productions, before the parties said the dispute was resolved in April 2025.

A key mediation session took place on Oct. 15, 2024. The parties did not settle that day, but continued negotiations through the mediator. In July 2025, they accepted a double-blind proposal calling for a monetary payment to Cognizant by the company’s directors and officers insurers.

The settlement is set for a hearing on Sept. 14, 2026, at 11:00 a.m. in Newark, New Jersey.

The notice says the earlier related securities class action against Cognizant was settled for $95 million, with a substantial majority of that amount paid by insurers under the company’s directors and officers policies. Following these announcements, the company's shares moved -1.91%, and are now trading at a price of $42.57. Check out the company's full 8-K submission here.

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