Ebix, Inc (NASDAQ:EBIX) and an affiliate of Goldman Sachs & Co. terminated their merger agreement due to a new investigation opened against the financial software company by a U.S. Attorney’s office.

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The financial software company received a letter from the U.S. Attorney for the Northern District of Georgia indicating that it opened an investigation after learning about the pending shareholder class action lawsuit against its directors and officers, the media, and other sources on allegations of intentional misconduct.

The Securities and Exchange Commission (SEC) has been investigating the accounting practices of Ebix, Inc (NASDAQ:EBIX). The inquiry was focused on the company’s revenue recognition, internal controls, and the accuracy public statements provided to shareholders.

Ebix Moving On Despite Allegations

According to Ebix, Inc (NASDAQ:EBIX), the U.S. Attorney’s investigation is still in the preliminary stages and it is too early to determine whether the financial software company violated any securities laws or other regulations, or if any individual might be considered a target, subject or witness in the inquiry.

Ebix, Inc (NASDAQ:EBIX) and the affiliate of Goldman Sachs & Co ended their merger agreement without payment of a termination fee by either party, and agreed to release each other from all claims arising from or related to the terminated deal.

Robin Raina, chairman and CEO of Ebix, Inc (NASDAQ:EBIX) said, “We believe the allegations in the class action suits are without merit. We want to thank Goldman Sachs for their interest in acquiring Ebix and we are naturally disappointed that we could not complete a transaction at this time.”

“The company remains focused on running its business and continuing to provide its customers with the high quality products and services on which they rely. The company’s balance sheet remains strong and we believe the Company is well positioned for future growth and success,” added Raina.

Furthermore, Pavan Valla, chairman of the special committee of the board of directors said the financial software company will cooperate with all the regulatory authorities as they conduct their investigations. Valla said, “We look forward to what we expect will be a favorable resolution of these matters. We are committed to the highest standards of integrity in our business, and have confidence in the ability of the Ebix management team to lead the company forward.”

Private Deal for Ebix Would Assure Shareholders $20 per Share

The board of directors of Ebix, Inc (NASDAQ:EBIX) plans to continue to evaluate strategic options.  The company entered a go-private deal worth $820 million including the assumption of its outstanding debts by the affiliate of Goldman Sachs & Co. Under the agreement, shareholders of  Ebix are supposed to receive $20 per share in cash.

The stock price of Ebix, Inc (NASDAQ:EBIX) dropped by more than 25 percent to $14.75 per share on Wednesday.