Chamath Palihapitiya-backed Clover Health gets notice of SEC investigation


Chamath Palihapitiya

Olivia Michael | CNBC

Chamath Palihapitiya-backed Clover Health Investments said on Friday it received a letter from the U.S. Securities and Exchange Commission and that it intends to cooperate with the investigation.

Clover, however, pushed back against a critical report from short-selling specialist Hindenburg Research, saying some claims in the report were “completely untrue.”

On Thursday, Hindenburg published a scathing report, the title of which called Clover Health a “broken business,” sending the insurance firm’s shares down more than 10%, their biggest daily percentage drop in four months.

Hindenburg also said Clover was under investigation from the Department of Justice and the investigation was not disclosed to investors. In its response to the Hindenburg’s report on Friday, Clover said it has received inquiries from the DOJ, but did not believe the inquiries were material to its investors. The company characterized the DOJ inquiries as standard practice since Clover works with the Medicare system.

Clover said it decided it did not need to disclose the DOJ inquiries after consultation with its lawyers. The company did not say what the DOJ’s inquiries were about. On the SEC side, Clover said it received the letter from the agency on Thursday following the publication of Hindenburg’s report. The company said it was unware of any investigations outside of the letter from the SEC it received Thursday.

–Reuters contributed to this report.

This story is developing.

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