February 23, 2021 - An investor in shares of Ebix, Inc. (NASDAQ: EBIX) filed a lawsuit in the U.S. District Court for the Southern District of New York over alleged violations of Federal Securities Laws by Ebix, Inc. in connection with certain allegedly false and misleading statements made between November 9, 2020 and February 19, 2021.
Johns Creek, GA based Ebix, Inc. provides software and e-commerce solutions to insurance, finance, healthcare, and e-learning industries. On February 19, 2021, after the market closed, Ebix, Inc. (NASDAQ: EBIX) revealed that its independent auditor, RSM US LLP ( RSM ), resigned as a result of being unable, despite repeated inquiries, to obtain sufficient appropriate audit evidence that would allow it to evaluate the business purpose of significant unusual transactions that occurred in the fourth quarter of 2020 related to the Company’s gift card business in India. RSM had also stated that there was a material weakness related to Ebix’s failure to design controls over the gift or prepaid card revenue transaction cycle sufficient to prevent or detect a material misstatement. In addition, Ebix and RSM disagreed over the accounting treatment of $30 million that had been transferred into a commingled trust account of Ebix’s outside legal counsel in December 2020. Shares of Ebix, Inc. (NASDAQ: EBIX) declined from $64.14 per share on January 27, 2021, to as low as $22.72 per share on February 23, 2021.
According to the complaint the plaintiff alleges on behalf of purchasers of Ebix, Inc. (NASDAQ: EBIX) common shares between November 9, 2020 and February 19, 2021, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between November 9, 2020 and February 19, 2021, the Defendants failed to disclose to investors that there was insufficient audit evidence to determine the business purpose of certain significant unusual transactions in Ebix’s gift card business in India during the fourth quarter of 2020, that there was a material weakness in the Company’s internal controls over the gift or prepaid revenue transaction cycl, that the Company’s independent auditor was reasonably likely to resign over disagreements with Ebix regarding $30 million that had been transferred into a commingled trust account of Ebix’s outside legal counsel, and that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.