A planned merger was cancelled after US regulators started investigation of misconduct at Ebix. The insurance software provider said that the planned merger between Ebix and Goldman Sachs Group Inc. affiliate was cancelled.

Ebix said that it was notified of the investigation through a letter received on June 14 from the US Attorney for the Northern District of Georgia.

On Wednesday, the shares of Ebix went down to 25% in after-hours trade. It closed at US$19.72 on the Nasdaq.

In a statement released by Pavan Bhalla, chairman of Ebix's Committee of the Board of directors, he stated that the company believed the allegations in the class action lawsuits that formed the investigation are without any merit.

The allegations included inaccuracies in its financial statements. Last month, an affiliate in Goldman's merchant bank had come to assist Ebix by agreeing to purchase the firm for US$743 million.

Goldman Sachs was not immediately available to give a statement outside regular business hours.

The merger deal was cancelled without any termination fee from either party according to Ebix.

Ebix stated its intentions to continue evaluating other strategic options.