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Palihapitiya-sponsored Clover Well being reveals SEC probe and refutes short-seller allegations

© Reuters. FILE PHOTO: The Securities and Exchange Commission logo adorns an office door

By Anirban Sen.

(Reuters) – Chamath Palihapitiya-backed Clover Health Investments Corp announced on Friday that it had received a letter from the US Securities and Exchange Commission following a critical report from well-known short seller Hindenburg Research.

The company said the agency has "requested the retention of documents and data for the period January 1, 2020 to date in relation to certain matters referred to in the article".

Clover said it intended to work with the investigation.

The company also announced a separate earlier investigation by the U.S. Department of Justice on Friday, but added that it had not received any civil inquiries or subpoenas from the department.

Palihapitiya and the Company were fully aware of the DOJ's investigation, which it did not consider "material information" for its previous disclosures, Clover said.

On Thursday, Hindenburg released a damning report titled Clover as a "broken business" and accused the company of failing to publish a DOJ investigation into its business model and software offering, Clover Assistant.

The insurance company's shares fell more than 12%, the largest daily percentage decline in four months according to the report.

Clover said Friday that some of the allegations were "totally false" and executives Vivek Garipalli and Andrew Toy said in a separate blog post that the report was "full of ad hominem attacks, widespread inaccuracies and gross misrepresentations."

Hindenburg was the first major short selling research firm to release a new report since the battle between short sellers and investors began two weeks ago GameStop Corp. (NYSE 🙂 and a number of other stocks.

Clover, who sells Medicare-backed insurance plans, went public in a $ 3.7 billion deal with a Palihapitiya-backed special purpose vehicle (SPAC). Other investors include Alphabet (NASDAQ 🙂 Inc and Silicon Valley-based venture capital giant Sequoia Capital.

Clover shares were up nearly 4% before the bell.

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