NEW YORK (TheStreet) -- Enterprise software developer Textura (TXTR) allegedly lied about its prospects and intentionally omitted facts from the biography of its CEO in securities filings ahead of its initial public offering and a follow-on offering with the help of some of its underwriters, according to a Thursday, Dec. 26 report from short seller Citron Research.
Chicago-based Textura's shares was falling on Friday 6.6% to $21.24.
Andrew Left, executive editor of Citron Research, said in his movie-themed report: "'American Hustle' meets 'Wolf of Wall Street'" that Textura's "prospectus lied to the SEC about the two most important components of their business model - and they were actually busted for it."
As evidence Left cited language from the prospectus about "recurring revenue model with high visibility" and "high client retention." When Textura was asked by the Securities and Exchange Commission to provide specific quantitative evidence in this regard, the company instead told the SEC it was removing the language.
"In over 13 years of publishing and reading SEC comments we have never seen a company make two bold claims as above, but simply turn and run from them without even an attempted defense when challenged by SEC staff," the Citron report claimed.
Left said in an interview that he started looking into Textura after he learned that the company's CEO Patrick Allin omitted certain things from his biography in the prospectus.
"When a CEO is lying about his biography, that's a number 1 sign of fraud, and I say let's start looking at everything else," Left said.