Clover Health Investments Corp revealed on Friday it had received a letter from the U.S. Securities and Exchange Commission following a critical report published by noted short-selling specialist Hindenburg Research.
The company said the agency had requested “document and data preservation for the period from January 1, 2020, to the present, relating to certain matters that are referenced in the article.”
Clover said it intends to cooperate with the investigation.
The company on Friday also disclosed a separate earlier inquiry from the U.S. Department of Justice, but added it had not received any civil investigative demands or subpoenas from the department.
Palihapitiya and the company were fully aware of the DOJ inquiry, which it did not consider as “material information” for its earlier disclosures, Clover said.
On Thursday, Hindenburg published a scathing report, the title of which called Clover a “broken business,” and accused the company of not disclosing a DOJ investigation into its business model and its software offering, Clover Assistant.
The insurance firm’s shares fell more than 12%, their biggest daily percentage drop in four months, following the report.
Clover said on Friday some of the claims were “completely untrue” and executives Vivek Garipalli and Andrew Toy said in a separate blog post that the report was “rife with ad-hominem attacks, sweeping inaccuracies and gross mischaracterizations”.
Hindenburg was the first major short-selling research house to publish a new report since the eruption two weeks ago of the battle between short-sellers and investors over GameStop Corp and a number of other stocks.
Clover, which sells Medicare-backed insurance plans, went public through a $3.7 billion deal with a special purpose acquisition company (SPAC) backed by Palihapitiya. Its other investors include Alphabet Inc and Silicon Valley-based venture capital giant Sequoia Capital.
Shares of Clover were up nearly 4% in trading before the bell.