Law firm Block & Leviton announced today that it has filed a class action lawsuit on behalf of shareholders of Clover Health Investments, formerly Social Capital Hedosophia Holdings III and certain of its executives for securities fraud.
Social Capital Hedosophia III completed the merger with Clover Health last month in a deal valued at $728 million.
On Feb. 4, Hindenburg Research issued a report stating that prior to the merger, Clover has been under active investigation by the U.S. Department of Justice for issues ranging from kickbacks to marketing practices to undisclosed third-party deals.
“Clover did not reveal that it was under active investigation by the DOJ,” the plaintiff’s law firm said in a statement. “Clover’s shares closed down approximately 12.3% on February 4, 2021, representing a one-day loss in market capitalization of approximately $700 million. On February 5, 2021, Clover acknowledged that it was aware of the DOJ investigation before entering into the business combination with Social Capital Hedosophia Holdings Corp. III, and also disclosed that it had received an inquiry from the U.S. Securities and Exchange Commission following publication of Hindenburg’s report.” Read more.
