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Further, our analysis detailed a lack of de novo growth, which was supplemented with two tactics: tax arbitrage and destructive cost cuts (headcount reductions and offshoring). We questioned the sustainability of this strategy and notified the IRS and SEC of the material abuses we believed were so pervasive at Ebix. Since our original report, damaging information has materialized, including accusations from former employees of Peak that Ebix made "Fraudulent Misrepresentations" and "acted with utter disregard and recklessness." It is our opinion that the malfeasance at Ebix is even more egregious than what occurred at OCZ, which we wrote about last year.[2] Since our report on OCZ, the CEO and CFO have resigned, the stock has declined by 85%, and the company disclosed an SEC investigation on November 21, 2012.[3]Earlier this month, Bloomberg News reported that the SEC is currently conducting an investigation into Ebix in a story titled "Ebix Accounting Practices Said to Be Probed by SEC."[4] According to Bloomberg,weight-watchers-community-christia.manifo.com, the SEC investigation has been ongoing for the past year and is "focused on revenue recognition, internal controls and the accuracy of the company's public statements to shareholders." The Bloomberg article cited information from four different sources, including three former Ebix employees who had conducted interviews with the SEC, as well as naming the specific SEC attorney leading the investigation.
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