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AmTrust Financial saw its stock price plunge nearly 19 percent Tuesday following a alleging a 2014 FBI investigation of its accounting practices. The New York-based insurance company denied knowledge of any investigation and has tried to move on from questions about its accounting practices by focusing on its new chief accounting officer and other efforts to boost its internal controls.

AmTrust closed at $15.30 after a heady day of trading on the NASDAQ on April 11, down 18.92 percent. That was a cap to a day when AmTrust issued a statement that strongly denied knowledge of any investigation. The news report was a setback for AmTrust, which began a campaign only a few days before to move beyond an audit of financials going back to 2014 that led to the delayed release of its 2016 annual report.

The latest controversy revolved around an article in the Wall Street Journal alleging, in part, that BDO, an independent auditor formerly used by AmTrust, recorded conversations for the Federal Bureau of Investigation with a device made to look like a Starbucks gift card, and also worked as a whistleblower regarding AmTrust’s accounting with the Securities and Exchange Commission.

AmTrust said it was unaware of any investigation and questioned the credibility of those interviewed for the Wall Street Journal, insisting that the story revealed nothing new.

Here’s AmTrust’s full statement:

“The Wall Street Journal today published an article suggesting there was an alleged FBI investigation in 2014 — three years ago — with respect to AmTrust’s accounting practices initiated by complaints made by short sellers. AmTrust is not aware of any such investigation, nor for that matter has it ever been contacted by the FBI with respect to such an investigation. Further, AmTrust is not aware of any special examination by the New York Department of Financial Services, other than examinations conducted in connection with AmTrust’s 2014 Tower transaction, which the Department approved.

AmTrust has no direct knowledge of any of the individuals, named or unnamed, referenced in the article and is certainly not aware that they have any credibility with respect to their understanding of AmTrust or its regulators. Immediately following AmTrust’s filing of its 2016 Form 10-K, and the unqualified audit opinion issued by KPMG, the Wall Street Journal contacted AmTrust concerning a possible article in which it seemed that AmTrust would be a part. We have been as responsive as possible to the Wall Street Journal during this period. Many of the questions from the Wall Street Journal related to the disproved short seller themes about AmTrust that have been used unsuccessfully by shorts and their confederates for the past several years. There is nothing in today’s Wall Street Journal article in terms of the company’s operations or financial results that is different from these old, recycled short seller themes.”

AmTrust due to an ongoing KPMG audit of financial results from 2014-2016. In mid-March, its opinion on its consolidated financial statements for 2014 and 2015 and its opinions on the effectiveness on internal financial reporting controls were also at issue.

On April 4, AmTrust finally released its 2016 annual report and updated financials going back to 2014. The audit had some impact on 2014 and 2015 net income. According to AmTrust, the restatements led to a 7.2 percent decline of net income attributable to common stockholders in 2014 and an 11.2 percent drop in 2015.

Moving Forward?

AmTrust has repeatedly said it is moving forward with a focus on boosting its internal financial controls. Toward this end, AmTrust announced on April 10 that it had hired Robert Schwarz for the newly created position of chief accounting officer and senior vice president.

Schwarz, most recently a vice president and assistant controller at Assurant, will be responsible for accounting policies and financial processes, including preparation of financial statements. AmTrust, in its announcement of Schwarz’s hiring, noted it had hired or promoted a number of other executives over the last year in order to beef up its finance and accounting leadership.

Barry Zyskind, AmTrust’s chairman and chief executive officer, said the company was focusing on making sure its “accounting and finance systems, expertise and skills are aligned to support our size and scale.”

He added that AmTrust’s new hires of senior finance and treasury will help strengthen “our internal controls, analysis and reporting environment, in support of our commitment to sound and transparent financial disclosure.”

Source: AmTrust Financial Services

Hollmer is editor of Carrier Management’s daily newsletter, where this article was .