An Atlanta-based firm that designs software for insurance companies is under investigation by federal regulators, according to Bloomberg News.
But the CEO of the company, Ebix, said he is unaware of any such probe and called the report “a complete lie,” the Bloomberg article said.
Ebix’s share price plummeted Monday following the report, which said the Securities and Exchange Commission had opened an investigation into its accounting practices.
Ebix shares opened Monday at $22.28 and tumbled 30 percent before rebounding to $19.26, down about 14 percent for the trading day.
Bloomberg reported the investigation concerns Ebix’s “revenue recognition, internal controls and the accuracy of the company’s public statements to shareholders.”
Bloomberg cited four unnamed individuals with direct knowledge of the situation, including three former employees who said they were interviewed by the regulator. The Atlanta Journal-Constitution could not independently confirm the probe.
SEC spokesman Kevin Callahan declined to comment.
“The Ebix senior management team has not been advised of nor is it aware of any SEC investigation regarding the Company’s previous filings,” Chairman, President and CEO Robin Raina said in a statement. “We stand behind the accuracy of our public filings. The Bloomberg article is inaccurate and misleading in many respects and we intend to evaluate all avenues of recourse.”
In the Bloomberg report, Raina wrote in an e-mail: “You could not be more off the mark — that is a complete lie and at least not known to us in any manner whatsoever.”
Typically, when the SEC believes it has enough information to bring an enforcement action, it sends a company what is known as a Wells Notice.
In March 2011, Ebix denied a scathing series of blogs about the company’s financial reports published on the financial opinion website Seeking Alpha. The posts, under the pseudonym “Copperfield Research,” were written by an entity that had shorted Ebix stock, meaning the investor stood to gain if the stock price declined.
Ebix has been a serial acquirer of other technology companies. Though headquartered in Atlanta, much of the company’s software development takes place in India and Singapore.
Ebix reports third quarter results on Thursday. The company posted second quarter revenue of $47.7 million and profit of $18.1 million..
About the Author
