Shares of Clover Health (NASDAQ:CLOV) stock are hurting on Thursday morning after a new short-selling report from Hindenburg Research.
In the document, Hindenburg said that Clover Health is under investigation by the U.S. Department of Justice (DOJ) after its recent special purpose acquisitions (SPAC) merger from investor Chamath Palihapitiya. Palihapitiya, who held a 27% stake in Clover Health as of Jan. 7, is the founder and CEO of California-based Social Capital.
The report claims that during the SPAC merger last month, the duo “misled investors about critical aspects of Clover’s business in the run-up to the [merger].” Additionally, the DOJ is investigating “at least 12 issues ranging from kickbacks to marketing practices to undisclosed third-party deals, according to a Civil Investigative Demand” that Hidenburg obtained. In fact, one example was that Clover had misleading marketing that specifically targeted the elderly.
Moreover, Seeking Alpha reported that Clover Health will be issuing a statement regarding the report in the next few hours. That will be included here when it becomes available.
CLOV stock was down 10% as of Thursday morning.
On the date of publication, Nick Clarkson did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Nick is a web editor at InvestorPlace.