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Temenos exposed by Hindenburg for dubious accounts

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TLDR:

Short-seller Hindenburg Research has targeted enterprise software firm Temenos AG with a report claiming that the Swiss company engaged in “roundtripping schemes”, exaggerated its R&D spend, and had dissatisfied customers. The allegations also included claims that Temenos insiders sold $702m in company stock during major buybacks.

Key Points:

  • Short-seller Hindenburg Research has published a report accusing Temenos AG of a range of misconduct
  • The allegations include claims that Temenos engaged in “roundtripping schemes” and insider selling
  • The report also accused the Swiss firm of exaggerating its R&D spend and having dissatisfied customers

Swiss enterprise software firm Temenos AG has been targeted by short-seller Hindenburg Research in a report that accuses the firm of a wide range of wrongdoing including “roundtripping”, insider selling, inflating its R&D spend and providing poor customer service. Hindenburg’s report claimed that Temenos engaged in a “roundtripping scheme” in which it invested $20m in payments firm Mbanq, which in turn bought $20m of software from Temenos. It quoted a former Temenos executive: “If that was in the US and that was with the SEC, everyone would be out.”

The report also claims that Temenos misled investors about its R&D spend, inaccurately capitalizing customer-specific implementation costs, and reported distorted earnings and margins as a result. It also alleges that there was “rampant dissatisfaction” among banks that used Temenos’s Infinity product.

Hindenburg also accused insiders of selling $702m in company stock during three buybacks in 2017, 2018/2019 and 2021, while the company bought back around $554m in shares. After the publication of the report, shares in Temenos dropped by 30%. The company has been contacted by Proactive for a comment.

Original article by William Farrington

Swiss enterprise software firm Temenos AG has been targeted by short-seller Hindenburg Research in a report that accuses the firm of a wide range of wrongdoing including “roundtripping”, insider selling, inflating its R&D spend and providing poor customer service. Hindenburg’s report claimed that Temenos engaged in a “roundtripping scheme” in which it invested $20m in payments firm Mbanq, which in turn bought $20m of software from Temenos. It quoted a former Temenos executive: “If that was in the US and that was with the SEC, everyone would be out.”

The report also claims that Temenos misled investors about its R&D spend, inaccurately capitalizing customer-specific implementation costs, and reported distorted earnings and margins as a result. It also alleges that there was “rampant dissatisfaction” among banks that used Temenos’s Infinity product.

Hindenburg also accused insiders of selling $702m in company stock during three buybacks in 2017, 2018/2019 and 2021, while the company bought back around $554m in shares. After the publication of the report, shares in Temenos dropped by 30%. The company has been contacted by Proactive for a comment.

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