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What: Another day, another double-digit move in BofI Holding (NASDAQ:BOFI). Shares of the Internet bank were trading lower modestly during the day until a bevy of class-action suits were revealed around noon EDT. Its share price fell quickly, with shares ending the day down nearly 15%.

So what: BofI Holding may be the world's best example of a battleground stock. It all started in August, when The New York Times ran an article suggesting that BofI Holdings earns outsize returns on its loans by lending to riskier borrowers -- people who wouldn't qualify for mortgages from more stringent lenders. It's no secret that Bank of Internet has a different loan book from other lenders, but it believes its lower loan-to-value ratios provide a safety net.

Troubles resurfaced on Tuesday when another article indicated that a former internal auditor, Matt Erhart, filed a complaint alleging that the bank hid important information from regulators, among other issues. BofI Holding responded by hosting a conference call with analysts after the market close. During the call, the bank denied the allegations.

On Thursday, yet another article surfaced from The New York Times. The most interesting revelation was that Jonathan Ball, a former BofI auditor who isn't part of Mr. Erhart's suit, left the bank because of "concerns about how the bank was responding to regulators," according to an unnamed source quoted in the piece.

That brings us to today. With BofI Holding's share price dropping, class-action lawyers are having a field day announcing that they are investigating the bank to determine whether its responses to Mr. Erhart's claims were factual. Frankly, if its explanations were inaccurate, class-action lawyers are the least of BofI Holding's worries, yet the selling seemed to intensify as the press releases rolled out.

Now what: This will likely be a battleground of highly publicized back-and-forth exchanges for weeks, if not months, to come. Given BofI Holding's high valuation and the seriousness of the claims made by one of its former auditors, daily 10% gyrations could become the new normal until all the details are completely sussed out.

 

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.