US-based business and consumer database provider infoGROUP has removed its Indian-origin founder Vinod Gupta from the post of its chairman, following a shareholder lawsuit against the company and a probe by market regulator Securities and Exchange Commission (SEC).
Gupta, who founded the company in 1972, would however continue as its CEO, infoGROUP said in a statement. Borrowing $100 from a bank to get started, the infoGROUP has grown from a one-man operation to a global employer of over 5,000 with revenues of $750 million.
Bill Clinton’s book ‘Giving’ described the company as one that “has made a concerted effort to hire people who were on welfare, as well as people who are disabled or who have to support themselves after getting out of unsafe domestic situations.” Gupta was appointed by President Clinton to serve as a trustee of the John F Kennedy Center for the Performing Arts in Washington, DC. He is the director of a mutual fund in the Everest mutual fund family. Gupta was also nominated and confirmed to be the United States Consul General to Bermuda as well as nominated by the President to be the United States Ambassador to Fiji.
Gupta’s ouster comes after an independent review by a Special Litigation Committee (SLC) of the company’s board on issues raised in litigations filed against it and in response to an informal investigation by the SEC.
The committee determined that various related party transactions, expense reimbursements, and corporate expenditures were excessive.
Following the review, the changes include separation of the roles of chairman and CEO and appointment of a new chief financial officer (CFO). Gupta has also orally agreed with the SLC to pay the company $9 million subject to execution of a definitive settlement agreement and upon the court approval of the settlement. “I thank the SLC for all its hard work and endorse the recommended governance changes, which will implement best corporate practices at infoGROUP,” Gupta said. “I believe this resolution will allow the company to move forward and continue to focus on providing our clients with industry-leading marketing solutions,” he added.