IN RE EBIX, INC. SECURITIES LITIGATION
IN RE: EBIX, INC. SECURITIES LITIGATION.
Civil Action No. 1:11-CV-02400-RWS.
United States District Court, N.D. Georgia, Atlanta Division.
September 28, 2012.
RICHARD W. STORY, District Judge.
This case comes before the Court on Defendants' Motion to Dismiss Consolidated Amended Complaint [28-1]. After reviewing the record, the Court enters the following Order.Background
This is a consolidated securities class action. Plaintiffs bring claims under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (hereinafter "Exchange Act"), 15 U.S.C. §§ 78j(b) and 78t(a), and Securities and Exchange Commission (hereinafter "SEC") Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder. Plaintiffs represent all persons who purchased or otherwise acquired Ebix, Inc. common stock between May 6, 2009 and June 30, 2011 (the "Class Period"). Defendants are Ebix, Inc., Robin Raina (Chief Executive Officer of Ebix during the Class Period), and Robert Kerris (Chief Financial Officer of Ebix during the Class Period).
I. Summary of Factual Allegations
Plaintiffs, in their Consolidated Amended Complaint (hereinafter "CAC") , allege Ebix, Inc. and Defendants Raina and Kerris (hereinafter "Individual Defendants") made a series of statements that misled investors and artificially increased the value of Ebix securities in violation of §§ 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5. The facts discussed below come entirely from Plaintiffs' CAC and are taken as true. Ebix supplies software and e-commerce solutions to the insurance and financial industries. Plaintiffs allege that Defendants made materially misleading statements regarding Ebix's foreign tax strategy, internal controls, and organic growth rate in violation of federal securities laws. Defendants' misrepresentations in these areas resulted in overstatement of Ebix's net income and dilution of earnings per share. According to Plaintiffs, the truth about these aspects of Ebix's business was revealed to the market on March 24, 2011 in a research report published by Seeking Alpha (a blog covering stock market news and financial analysis) and carried by Bloomberg. That day, Ebix share prices fell 25.8% (to $22.52, down from an intraday, class period high of $30.35). On June 30, 2011, Bloomberg disclosed that former shareholders of a company acquired by Ebix had sued Ebix. That article reiterated much of the information published by the Seeking Alpha blog three months earlier. On that date, stock prices fell further — to $19.05, down 6% from an intraday high of $20.93.