Ebix, Inc. Class Action Lawsuit
- Company Name
- Ebix, Inc.
- Stock Symbol
- Class Period
- November 9, 2020 to February 19, 2021
- Southern District of New York
The Ebix, Inc. class action lawsuit charges Ebix and certain of its executives with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers or acquirers of Ebix securities between November 9, 2020 and February 19, 2021 (the “Class Period”). The Ebix class action lawsuit was commenced on February 22, 2021 in the Southern District of New York and is captioned Teifke v. Ebix, Inc., No. 21-cv-01589.
Ebix supplies infrastructure exchanges to the insurance, financial, travel, cash remittances, and healthcare industries.
The Ebix class action lawsuit alleges that, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (i) 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; (ii) there was a material weakness in Ebix’s internal controls over the gift or prepaid revenue transaction cycle; and (iii) Ebix’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 (iv) as a result of the foregoing, defendants’ positive statements about Ebix’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On February 19, 2021, after the market closed, Ebix revealed that its independent auditor, RSM US LLP, 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 Ebix’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. On this news, Ebix’s share price fell approximately 40%, damaging investors.
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