SPAC Securities Class Action Comes for Recently Public Health Care Company

Proskauer - Corporate Defense and Disputes

Proskauer - Corporate Defense and Disputes

Clover Health is an insurance company focusing on Medicare Advantage that uses its proprietary software platform to offer PPO and HMO plans to eligible consumers.  It fits the mold for many would-be SPAC acquisitions: a technology company with its own platform (known as the Clover Assistant) servicing a growing industry (health care).  Chamath Palihapitiya must have thought so as well, as Clover Health announced its plans to merge with his SPAC – Social Capital Hedosophia Holdings Corp. III (“SCH”) – on October 6, 2020.  The business combination was completed three months later, on January 7, 2021.

However, less than one month later, a sole plaintiff filed a purported federal securities class action against Clover Health Investments, SCH, and relevant officers and directors in the United States District Court for the Middle District of Tennessee.  In his complaint, the plaintiff highlighted an analyst report alleging Clover Health and Mr. Palihapitiya “misled investors about critical aspects of Clover’s business in the run-up to the company’s SPAC go-public transaction” and that Clover Health was under active investigation by the Department of Justice for allegedly improper business practices.  Based on these allegations, the complaint contends Clover Health failed to disclose material information, causing its public statements to be materially false and misleading.

Clover Health has not yet filed its response, and the Court has not made any statements about class certification.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Proskauer - Corporate Defense and Disputes | Attorney Advertising

Written by:

Proskauer - Corporate Defense and Disputes

Proskauer - Corporate Defense and Disputes on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.