The shares of Ebix Inc (NASDAQ:EBIX) declined by more than 20 percent, to $15.49 per share, on Monday morning, following reports that the Securities and Exchange Commission (SEC) is investigating its accounting practices. The stock value of the company gained a few percentage points during the afternoon trading, and it is trading around $19.43 per share. The stock is still down by more than 13 percent.
According the report from Bloomberg, the SEC has been investigating Ebix Inc (NASDAQ:EBIX) for the past year. The investigation is focused on the company’s revenue recognition, internal controls, and the accuracy the public statements provided to shareholders. The information was revealed by three sources, who requested anonymity because the ongoing investigation is not yet disclosed to the public.
Robin Raina, chairman and chief executive officer of the Ebix Inc (NASDAQ:EBIX), denied reports that the company is being investigated by the SEC. Bloomberg cited an e-mail written by Raina, which reads, “You could not be more off the mark — that is a complete lie and at least not known to us in any manner whatsoever.”
In addition, John Jordak, legal counsel of Ebix Inc (NASDAQ:EBIX) said, “We’ve received no notice from SEC enforcement that they’re investigating us.
Meanwhile, Justin Jefferies, the lawyer who was reported as the lead investigator in the case, did not return the phone calls from Bloomberg, while the Kevin Callahan, the spokesperson of the Commission declined to comment on the issue.
The company is facing accusations that it is inflating its income levels, or mishandling its internal accounts. Ebix Inc (NASDAQ:EBIX) is currently facing four legal charges in connection with the accusations.
U.S. District Judge Richard Story in Atlanta, ruled last September that Ebix must face a class action lawsuit. According to the ruling of the presiding justice, the allegations of investors, that Ebix Inc (NASDAQ:EBIX) and its management team misrepresented and omitted facts, were specific enough to allow the case to move forward.
Attorney Jordak said the company would defend itself against the case. According to him, “Ebix is entirely comfortable with the disclosures it made.”
The company is facing another lawsuit from an investor who filed a case in the federal court of Manhattan. The case was transferred to Atlanta.
The former owners of Peak Performance Solutions filed a complaint against Ebix Inc (NASDAQ:EBIX), due to alleged discrepancies in its accounts receivable and for breaking its $1.5 million earn out promise after acquiring the company in 2008.