What: Shares of BofI Holding (NASDAQ:BOFI) surged 21% shortly after market open, but have since moved to price about 13% higher than yesterday's close. It appears the market liked what it heard on yesterday's conference call in which BofI executives addressed claims made by a former internal auditor, Matt Erhart, that the bank hid critical information from regulators, among other allegations.

So what: One of the highest-valued banks on the market, one might argue that BofI Holding is priced for perfection. Allegations by a former internal auditor that BofI hid important information from regulators certainly don't help a highly priced stock keep its shine.

Executives helped analysts better understand the allegations by providing its side of the story on a call after the market closed. The bank's Executive Vice President and CFO, Andrew Micheletti allayed fears of deposit concentration, noting that its largest relationship was $30 million in size. The bank also noted that its top nine depositors make up 5% of its deposits, compared to allegations that nine customers made up 40% of its deposits.

The bank's officers also explained that the accounts lacking tax identification numbers were not accounts, but loans, and that Mr. Erhart didn't distinguish between the two. Information about loans lacking TINs, BofI executives explained, was delivered to regulators "in a separate request for information." The bank doesn't have any depositors without TINs.

In his prepared remarks, Greg Garrabrants, the bank's CEO, pointed out that assertions made about its loan loss reserving were also untrue, saying that "the Bank has never omitted a calculation which would impact the allowance for loan loss and leases."

Of course, this episode does bring up interesting questions about the bank's ability to manage its staff. One analyst, a former bank auditor himself, asked why the bank hadn't fired Mr. Erhart sooner if he was as poor at his job as the management team suggests. That answer, unfortunately, wasn't fully clear from the transcript. Mr. Erhart worked for the bank for about 18 months.

Now what: This is certain to be a mess as the "he said, she said" story line unfolds. BofI executives believe it's not just the company's former auditor, Mr. Erhart, behind the suit, given that they don't believe he has the capacity to fund the legal resources necessary for a suit like this. This event is far from over, but one thing is clear from the New York Times piece and the conference call yesterday: Both sides seem content to stick to their side of the story.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends BofI Holding. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.