The shares of BofI Holding are plummeting after the New York Times reported that the bank’s former internal auditor filed a lawsuit against it.

The stock price of BofI Holding was trading $112.68 per share, down by more than 20% at the time of this writing around 2:13 in the afternoon in New York. The stock traded as low as $100 per share earlier today.

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Allegations against BofI Holding

Matt Erhart, the former auditor of BofI Holding, claimed that he was fired after exposing a corporate and regulatory wrongdoing at the bank.

He alleged that the bank was cutting corners, failed to submit full and timely information to regulators while experiencing rapid growth. Mr. Erhart claimed that BofI Holding reported to the Comptroller of the Currency in January that none of its accounts lacked Tax Identification Numbers (TIN), but he saw a spreadsheet that contained as much as 200 accounts without TIN.

[drizzle]Mr. Erhart filed his lawsuit against BofI Holding in the federal court in the Southern District of California. He alleged that the bank violated federal laws that provided protection for whistle-blowers.

Carol Gillam, the lawyer representing Erhart told the newspaper, “As a former federal prosecutor and longtime employment lawyer, I find the bank’s conduct as alleged here to be among the most egregious I have seen from a publicly traded company.”

Last year, Citron Research, a short-seller said the worst is yet to come to BofI Holding. The bank was targeted by several other short-sellers including Greenwich and Kerrisdale Capital.

BofI Holding’s response

In response, BofI Holding CEO Gregory Garrabrants said the allegations were baseless. According to him, “The factual inaccuracies here are numerous and substantial. Mr. Erhart has made all of these allegations in great detail to federal regulators, who have reviewed them in depth and have found them to be wholly without merit.”

Mr. Garrabrants added they were planning to file a separate lawsuit against Mr. Erhart citing the reason that he abused the bank’s private information.

Meanwhile, the law firms, Glancy Prongay & Murray LLP and Block & Leviton LLP launched separate investigations against BofI Holding on behalf of investors. The law firms want to find out whether the bank violated federal securities laws.

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