The Securities and Exchanges Board of India (Sebi) has warned Mumbai-based global IT services provider, Tata Consultancy Services (TCS), for not disclosing the extent of damages related the 2016 Epic Systems’ case to investors in the US.

Sebi, in a letter issued to TCS on May 28 (Thursday), asked the company to ensure that disclosures provide adequate, accurate, explicit and timely information to the investors.

As per the disclosure made by the IT major to the exchanges on April 16, 2016, “The Jury’s verdict on liability and damages was unexpected as TCS believes that they are unsupported by the evidence presented during the trial. The Jury’s verdict will not have any impact on the TCSQ4 and FY16 financial results to be announced on Monday, April 18, 2016.”

According to Sebi, the disclosure indicated that TCS had received a jury verdict in lawsuit filed by Epic Systems in the court of Western District Madison, Wisconsin.

While the disclosure did not mention the $940 million penalty imposed against TCS as part of the verdict, the said amount was shown as part of contingent liabilities when the company announced its financial results on April 18, 2016, as per Sebi.

In another disclosure made on October 1, 2017, TCS specifically mentioned that the court significantly reduced the compensatory and punitive damages of $940 million to $420 million, Sebi said in a letter to the company.

Sebi’s letter was submitted to the stock exchanges on Thursday.

“The damages are substantial, more so when seen in comparison to Rs 24,292 crore net profit of TCS (consolidated) for FY”16. The disclosures made by TCS to stock exchanges on April 16, 2016 should have prominently displayed the extent of damages to enable investors to assess the impact of the jury”s verdict on the financials of the listed entity,” Sebi noted.

Further, the regulator said such an act goes against the spirit of Sebi rules that requires listed entities to ensure that the disseminations made by them are adequate, accurate, explicit, timely and presented in a simple language to the investors.

“In view of the above, you are hereby warned to be careful in dealing with disclosure of material information in the future and to ensure that the disclosures provide adequate, accurate, explicit and timely information to the investors. You are advised to exercise proper due diligence in future and avoid recurrence of such instances,” Sebi said.

Also, Sebi has advised TCS to place the letter before its board.

TCS, the country’s largest software exporter, is listed on BSE and NSE.