Citron Research the is third major short-seller to target BofI Holding, Inc. (NASDAQ:BOFI). Greenwich andKerrisdale Capital did so earlier this year. Below is the latest from Citron, with their short call on BofI Holding, Inc. (NASDAQ:BOFI)

H/T Activist Shorts

Citron on BofI Holding, Inc. (NASDAQ:BOFI)

Bank of the Internet (NASDAQ:BOFI) has been a controversial stock of late, with momentum investors taking long positions, while bloggers point out its rich valuation relative to peers.  The stock has nearly tripled since the beginning of 2013.

But things have changed – for the worse.  Citron believes that many investors in the stock may have missed recent developments which have huge implications on the future of the BOFI.

Citron believes that a powerful negative near-term catalyst is going to cause a reevaluation of this high-flying bank stock, and when that happens, all investors should take note.

While the company will deal with its obvious regulatory issues, investors will be stuck owning a  bank that has been playing fast and loose with their book, while showing metrics that should  concern any investor concerned with a closer examination.

Huge Regulatory Risk to Stored Value Card Competitors

BOFI operates in a unique niche called the Stored Value Card business. There are only three  major players in the Stored Value Card space.

BOFI’s pending acquisition of H&R Block bank would make it a major player in the Stored Value  space. Last month, The Bancorp Bank (NASDAQ:TBBK) became the second bank to be hit with  a Cease & Desist order, causing a 30% selloff in its stock, a loss it has not recovered.

http://compliance.csiweb.com/resources/newsletters.aspx?id=148§ion=infocus#.U6Gguv
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The Government crackdown on the stored value card business is real and not going anywhere.  In a banking industry article published TODAY, we read

“I would think this action sends a message to every other prepaid issuer  that they better be buttoned up on AML processes and work very closely  with their clients,” Colgan said.

Full document below via Citron Research

Short Sellers  BofI Holding, Inc. BOFI

BofI Holding Final