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Temenos Investigation Concludes: Findings Released on Misconduct Allegations

Temenos, a banking software company based in Switzerland, has completed an ‘independent examination’ into allegations of financial misconduct made by US investment research firm Hindenburg Research in February.

Hindenburg Research’s claims, which followed a four-month investigation, alleged that Temenos engaged in various forms of financial manipulation to artificially inflate its earnings. It cited findings from interviews with 25 former employees, including senior executives, revealing what it described as ‘hallmarks of manipulated earnings and major accounting irregularities’.

Following the allegations, Temenos experienced a significant setback in its stock value, plummeting nearly a third – the decline also marked the largest single-day drop in Temenos’ trading history. In response to these accusations, the company’s board of directors formed a special committee of independent directors to investigate the claims.

The report

Temenos stated that it granted unrestricted access to company executives, personnel, records, communications, and all relevant documents to the independent examiners. Their review analysed the allegations made by Hindenburg Research, including Temenos’ compliance with applicable accounting standards and regulations, its strategic partnerships, its licence renewal practices, the success of its products, its client relationships, as well as stock buybacks.

The Special Committee was formed by Temenos’ board led by the non-executive chairman, Thibault de Tersant. The committee was assisted by Schellenberg Wittmer Ltd, Sullivan & Cromwell LLP, and forensic accountants from Alvarez & Marsal Switzerland LLC (called the ‘independent examiners’).

Its subsequent report determined that Hindenburg made a series of ‘inaccurate and misleading allegations about Temenos and its accounting, products, and client relationships’. In addition, Hindenburg presented ‘purported ‘facts’ about Temenos in a distorted manner or out of context’.

Commenting on the announcement, Thibault de Tersant, chairman of Temenos, said: “I am pleased that the independent examiners have completed their review with the full cooperation and transparency from employees across the business.

“The report has found that Hindenburg’s Research’s allegations were inaccurate and misleading. It clearly reinforces the board’s view that Temenos is running a sound business, offering best in class products and has robust financial controls and strong governance oversight.

“Temenos remains fully focused on servicing its clients and building relationships with its partners. The board is confident that Temenos’ strategic plan and critical mass will allow it to continue to lead this market.”

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