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BREAKING- Ebix Says Bloomberg Story ‘False and Inaccurate’ (EBIX)

Shares of Ebix (NASDAQ: EBIX)plunged after Bloomberg reported that it was being investigated for money laundering. (Read our previous coverage here.) Ebix responded with the following press release:

Ebix, Inc., a leading international supplier of On-Demand software and E-commerce services to the insurance industry, today issued the following statement in response to an August 6, 2013 Bloomberg article regarding the Company:

Ebix is disappointed that Bloomberg published its erroneous article despite the Company’s clear and unambiguous statements that allegations of money laundering were false, inaccurate and likely to cause significant financial harm to Ebix shareholders. Bloomberg chose to disregard these formal objections, relying instead on sourcing its allegations to unnamed sources, and refusing to state whether these sources were in fact plaintiffs in litigation against Ebix. In addition, Bloomberg chose to disregard the Company’s observation that this amounted to providing these anonymous individuals with a platform to advance an unknown agenda and attack a publicly traded company.

Ebix confirmed that it has no business relationship or transactional relationship with any company affiliated with the Rennes Foundation, other than the investment in Ebix common stock by the Rennes Foundation. Ebix also noted that it is company policy not to comment on individual shareholders, such as the Rennes Foundation, which is mentioned in the Bloomberg article.

On July 2, 2013, the United States District Court for the Northern District of Georgia Atlanta Division entered an Order denying the Plaintiff’s Motion for Class Certification with respect to the shareholder lawsuit concerning the same subject matter as the SEC and U.S. Attorney’s investigations.

Ebix has filed a Motion for Judgment on the Pleadings based on recent binding authority issued by the U.S. Court of Appeals for the Eleventh Circuit, which is presently pending. On July 16, 2013, the Court entered a Stipulated Order Staying Discovery Pending Resolution of Defendants’ Motion for Judgment on the Pleadings.

As previously disclosed, the Company was notified that the U.S Attorney for the Northern District of Georgia had opened an investigation into allegations of intentional misconduct that had been brought to its attention from the pending shareholder class action lawsuit against the Company’s directors and officers, the media and other sources. The pending shareholder class action lawsuit and an SEC investigation involving the same subject matters as this lawsuit were previously disclosed by the Company in its periodic reports filed with the SEC.

Ebix continues to believe this lawsuit is without merit and is fully cooperating with the regulatory authorities as they conduct their investigations.

The Company also disclosed that the breach of contract litigation in Isaac, et al. vs. Ebix, Inc. remains pending. On March 26, 2012, the federal court judge dismissed, as lacking in merit, all the fraud claims asserted by Mr. Isaac and his fellow plaintiffs. The plaintiffs’ case is proceeding as a breach of contract suit. Ebix has filed counterclaims for breach of contract and unjust enrichment. The litigation is presently in the discovery phase.

Alston & Bird LLP and Skadden, Arps, Slate, Meagher & Flom LLP are acting as legal advisors to the Company.

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Disclosure: At the time of this writing, the author had no position in the company mentioned.

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