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(Reuters) - IT services provider Cognizant Technology Solutions (NASDAQ:CTSH) Corp said it was conducting an internal investigation into possible violations of U.S. anti-corrupt practices laws related to payments in India, sending its shares tumbling on Friday.
Cognizant also said President Gordon Coburn had resigned and would be replaced by Rajeev Mehta, the head of IT services.
The company, which gave no reason for Coburn's departure, did not immediately respond to a query on whether it was linked to the probe.
Cognizant's shares fell as much as 17.4 percent to $45.44, wiping out about $5.8 billion of market value.
The stock's drop was the biggest in more than four years and took it to its lowest since October 2014.
Cognizant said the investigation was looking at whether certain payments related to Cognizant facilities in India violated the U.S. Foreign Corrupt Practices Act and other laws.
Cognizant is based in Teaneck, New Jersey but about three-quarters of its employees are in India.
The investigation is focused on a small number of company-owned facilities, Cognizant said in a regulatory filing. It said it could not predict the impact on its financial results.
Cognizant said it had notified the Department of Justice and the U.S. Securities and Exchange Commission about the probe.
Citigroup (NYSE:C) downgraded Cognizant's stock to "neutral" from "buy", citing the investigation.
"It is too early to know more specifics, but the possible violations appear to be quite serious, especially given the resignation ...", Citigroup analysts wrote in a client note.
U.S. authorities said on Thursday that Och-Ziff Capital Management Group LLC would pay $412 million to resolve probes into the hedge fund's role in bribing officials in several African countries.