Chamath Palihapitiya-backed Clover Health continues to decline after responding to critical short-seller report, a day after falling 12%
- Shares of Clover Health continued to slide on Friday after falling 12% in the previous session following a report from short-seller Hindenburg Research.
- The Medicare insurer said the Justice Department made a "request for information".
- Clover said investor Chamath Palihapitiya was aware of the DOJ's inquiry.
Clover Health shares on Friday fell as much as 7% after suffering a 12% decline in the previous session, with the Medicare insurer saying it had received an information request from the US Justice Department, countering a short-seller's claim that it was under investigation.
Clover's response was met with a pending rebuttal by short-seller Hindenburg Research.
"Clover has not received any civil investigative demands or subpoenas from the Department of Justice," said Vivek Garipalli, chief executive of Clover Health, and Andrew Toy, president of Clover Health, in a statement. "Clover has received a request for information from the Justice Department, to which, as we do with all requests from regulatory bodies, we responded. This was on a voluntary basis."
The company also said Social Capital CEO Chamath Palihapitiya, who took Clover public via SPAC, was "fully aware of the DOJ inquiry."
Short-seller Hindenburg Research on Thursday alleged in a report that the Justice Department was investigating Clover in connection with "at least 12 issues ranging from kickbacks to marketing practices to undisclosed third-party deals."
Clover shot back further against Hindenburg. "Importantly, the short seller firm did not contact Clover, and we had no knowledge of the short seller report prior to it being made publicly available," it said. "In our view, it belies a desperate attempt for publicity while sacrificing any regard for the truth."
Hindenburg on Friday in a tweet said it will have more to say on the matter.
—Hindenburg Research (@HindenburgRes) February 5, 2021
Clover shares on Thursday slid by 12% following the report. On Friday, Clover shares were up in premarket trades before falling after the market open.
Clover stock traded at $12.02 as of 11:40AM E.T. Friday.
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