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Recent Probes Reporter Tweet Points To Undisclosed SEC Investigation Related To BOFI


In a very recent tweet from June 20th, the Probes Reporter indicated that it has confirmed an undisclosed SEC investigation related to BOFI.

Since September 2015, management has made numerous public claims that there is no federal investigation into the bank or its practices.

Has something changed? Or has management been hiding the truth?

Shareholders should demand answers from management as to the nature and scope of any potential probe uncovered by the Probes Reporter.

In the Friendly Bear's opinion, BOFI has recently been going to great lengths to silence its critics. BOFI has been actively subpoenaing large technology companies in order to attempt to unmask anonymous bloggers. Leading companies such as Twitter, Dropbox, and Seeking Alpha have all been party to subpoenas from BOFI. Our review of the most recent BOFI court filings also leads us to believe that the company's conspiracy theories only get nuttier and nuttier by the day.

Perhaps we now have an answer for why BOFI has been grasping at straws in its relentless witch-hunt.

When All Else Fails - Blame the Short Sellers

In a June 20, 2016 tweet, the well-known Probes Reporter organization tweeted publicly that it has confirmed an undisclosed SEC investigation pertaining to BOFI.

Source: Twitter

BOFI management no doubt will have something to say about this tweet, likely alleging that it is a "hit-piece" associated with short sellers. However, we have bad news to break to BOFI. Per the tweet below, it appears that the Probes Reporter is an independent organization with no ties to short selling activities:

Source: Twitter

Readers looking to for more detail on this topic can sign-up for the Probes Reporter service on their website.

The Probes Reporter allegations are particularly noteworthy given that management has repeatedly denied any SEC investigation since September 2015.

First, on a September 2015 call, BOFI's CEO made the following statement:

Source: Bloomberg Transcript of BOFI September 2, 2015 Business Update Call

Then on an October 14, 2015 business update call, BOFI again denied an investigation:

Source: Bloomberg Transcript of BOFI October 14, 2015 Business Update Call

BOFI's commentary regarding federal inquiries into its business got a little bit squishier starting with the October 29, 2015 call:

Source: Bloomberg Transcript of BOFI October 29, 2015 Business Update Call

And more recently, in a press release put out in response to the Houston securities fraud lawsuit, the company made the following even "squishier" claim:

Source: BOFI press release from April 18 th regarding "Share Price Volatility"

Hmmm…"the absence of public enforcement actions"

Based on the recent Probes Reporter Tweet, the cryptic language in the April press release is particularly eyebrow-raising.

Could it be that enforcement actions are still pending and remain non-public because an investigation is ongoing?

Adding the word "public" may very well be substantive given the recent allegations coming out of the Probes Reporter.

We may not know unless BOFI discloses the nature and scope of the potential SEC probe identified by the Probes Reporter. Until that point, investors will be left in the dark.

Since the whistleblower lawsuit was filed, the bank has highlighted its lack of enforcement actions from the OCC as a sign of nothing being wrong in its business model. However, many of the short-seller and former employee allegations that have surfaced in the past few months have related to BOFI's financial statements and disclosures - i.e. issues traditionally under the purview of the SEC rather than the OCC. It would make sense that BOFI would want to silence its critics if it is in fact under scrutiny.

Long-time readers of our blog posts are no doubt well aware of our extreme skepticism of BOFI's disclosure practices and financial statements. It will be interesting to see how this undisclosed probe plays out and whether the company ever deems it worthy of disclosure to investors.

Until then, we continue to believe that the short case on this stock grows ever stronger by the day as the smoke around this bold lending operation keeps getting even thicker.

Disclosure: I am/we are short BOFI.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am/we are short BOFI. All information for this article was derived from publicly available information. Investors are encouraged to conduct their own due diligence into these factors. Additional disclosure: This article represents the opinion of the author as of the date of this article. The information set forth in this article does not constitute a recommendation to buy or sell any security. This article contains certain "forward-looking statements," which may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "potential," "outlook," "forecast," "plan" and other similar terms. All are subject to various factors, any or all of which could cause actual events to differ materially from projected events. This article is based upon information reasonably available to the author and obtained from sources the author believes to be reliable; however, such information and sources cannot be guaranteed as to their accuracy or completeness. The author makes no representation as to the accuracy or completeness of the information set forth in this article and undertakes no duty to update its contents. The author may also cover his/her short position at any point in time without providing notice. The author encourages all readers to do their own due diligence.