Securities Arbitration Lawyers BlogDid You Lose Money Investing In Clover Health Investments, Corp.?
Silver Law Group is investigating potential claims on behalf of investors in Clover Health Investments, Corp. Clover Health is a health insurance services company based in Tennessee. In January 2021, Clover Health went public, but shortly thereafter, Hindenberg Research published a report calling into question Clover’s business practices leading up to Clover’s Initial Public Offering (IPO). Clover Health’s share price dropped more than 12% following the news.
Short Seller Hindenburg Published A Report Exposing Serious Alleged Misconduct
On February 4, 2021, Hindenburg Research published a report titled “Clover Health: How the ‘King of SPACs’ Lured Retail Investors Into a Broker Business Facing an Active, Undisclosed DOC Investigation”. The report lodged serious allegations regarding Clover Health’s business practices, including:
- Clover has not disclosed that its business model and its software offering, called the Clover Assistant, are under active investigation by the Department of Justice (DOJ), which is investigating at least 12 issues ranging from kickbacks to marketing practices to undisclosed third-party deals, according to a Civil Investigative Demand (similar to a subpoena) we obtained.
- Much of Clover’s sales are driven by a major undisclosed related party deal and misleading marketing targeting the elderly.
- In 2020, New Jersey legislators accused Clover’s CEO of siphoning over $157 million from his hospital network through a byzantine web of LLC shell entities.
This report, at a minimum, raises serious questions about Clover’s practices leading up to and following its IPO, which was completed via reverse merger with a Special Purpose Acquisition Corporation (SPAC). Investors who suffered losses investing in Clover Health may be entitled to recovery for this alleged misconduct.
Various Class Actions Against Clover Health Raise Further Concerns For Investors
In the past weeks, several class actions have been filed that further allege serious issues regarding Clover Health. Specifically, these lawsuits allege that the company made materially false and misleading statements in connection with taking the company public. Many of these lawsuits also name well-known venture capitalist Chamath Palihapitiya as a defendant, alleging that he made several supportive statements lauding Clover for, among other things, its transparency and strong business model. Notably, the Hindenburg report questions whether Palihapitiya’s endorsement could be connected to the fact that his firm received over 20 million “founders shares” in exchange for $25,000 and promoting the Clover Health SPAC.
The class action lawsuits allege various violations of federal securities laws, including violating Section 10(b) of the Exchange Act, which generally prohibits securities fraud.
Call Silver Law Group To Learn More About Your Rights As A Clover Health Investor & The Clover Health Class Action
Silver Law Group is investigating potential claims against Clover Health and/or liable third parties to recover investors’ losses. Silver Law Group is experienced in representing investors who lost money due to securities fraud. Silver Law Group represents investors in individual claims as well as class actions. If you or someone you know invested in Clover Health Investments, Corp., please contact Silver Law Group toll free at (800) 975-4345 or email ssilver@silverlaw.com for a confidential consultation.