Hollywood Firefighter Pension Lawsuit Alleges Insider Trading by United Health Execs, Including Slain CEO

The late Brian Thompson, along with two other executives, were accused of dumping stock prior to February announcement of a DOJ antitrust investigation into the company.



A
class action lawsuit brought by the City of Hollywood Firefighters’ Pension Fund alleged that slain UnitedHealthcare CEO Brian Thompson, and two other executives, were involved in insider trading in 2023.

The claim, filed May 15, alleged that Thompson, UnitedHealth Group CEO Andrew Witty, and UnitedHealth Group executive chairman Stephen Hemsley sold millions of dollars in stock upon learning in October 2023 that the DOJ had re-opened an antitrust investigation into UnitedHealth’s acquisition of Change Healthcare.

The suit, titled City of Hollywood Firefighters’ Pension Fund V. UnitedHealth Group, Andrew Witty, Stephen Hemsley, and Brian Thompson, filed in the U.S. District Court in the District of Minnesota, seeks class action status and aims to represent purchasers of UnitedHealth Group stock during the class period between March 14, 2022, the first trading day after the DOJ first opened its investigation into the company, and February 27, 2024.  

The claim alleges insiders, including Thompson and the named defendants, sold more than $120 million in stock after learning of the re-opening of the federal investigation, which was not made public until a February 27 report from the Wall Street Journal. 

For more stories like this, sign up for the CIO Alert daily newsletter.

According to the claim, Hemsley sold $102 million of his shares in the company, while Thompson sold $15 million worth of shares after learning the investigation was re-opened. The claim states that despite being aware of the investigation, it was not disclosed to investors or the public. 

The claim by participants in the Hollywood Firefighters Pension, which has $300 million in assets according to the court record, argues the pension fund suffered damages because of the decline in the company’s stock and seeks compensatory damages for plaintiffs. The fund requests a trial by jury to determine compensation.

As of January 31, 2024, UnitedHealth Group had more than 921 million shares outstanding, owned by “hundreds of thousands of investors.” 

A spokesperson for UnitedHealth Group did not respond to requests for comment. Law firms representing the plaintiff did not immediately respond to requests for comment. 

The DOJ’s antitrust case against UnitedHealth stemmed from the company’s January 6, 2021, announcement of its intent to acquire healthcare technology and payment processing firm Change Healthcare. UnitedHealth Group sought to integrate Change Healthcare into its Optum unit. 

Change Healthcare, operated an electronic data interchange clearinghouse which “enable the transmission of claims, remittances, and other critical information between payers and providers.”

The DOJ filed a lawsuit on February 24, 2022, challenging UnitedHealth’s acquisition of Change Healthcare, alleging the integration of Change and Optum would grant the company “unparalleled access to information regarding nearly every health insurer, as well as health data on every single American.”

UnitedHealth had already operated an EDI clearinghouse through its Optum Business. The DOJ claimed in its 2022 lawsuit the combined business would have access to a “vast amount of amount of its rival health insurers’ competitively sensitive information,” which would give the company an unfair advantage. 

UnitedHealth Group, in response, promised to set up a firewall to keep Change and Optum data separate after the merger. In September 2022, the United States District Court in the District of Columbia allowed the acquisition to proceed. 

According to reporting from the Wall Street Journal in February, the DOJ had re-opened its investigation into UnitedHealth’s acquisition of Change. Shares of the company fell $27 the day the story was published, erasing $25 billion in shareholder value, the claim stated. 

The pension claim alleges that UnitedHealth did not establish firewalls between its business units, as the company said it had.

“UnitedHealth never established proper firewalls between Optum and UnitedHealthcare as required by its own policy, and as it told the court in the antitrust action, the DOJ and investors it would do,” the claim states. “Firewalls were never properly created for certain business applications. Despite assurances to the contrary, there was never a meaningful technological separation between Optum and UnitedHealthcare that prevented the sharing of CSI.”

UnitedHealthcare CEO Brian Thompson was murdered Tuesday in New York City. The motive for the murder is still being investigated.

Related Stories:

LSV Responds to Lawsuit by Former Execs With Cease-and-Desist Letter

ExxonMobil CEO: Proxy Activists in Lawsuit Are Not Responsible Shareholders

PSERS, Aon Settle Lawsuit for $7M

Tags: , , ,

Norges Bank Excludes UK Mining Firm Evraz for Aiding Russia’s War Against Ukraine

The world’s largest pension also excluded a telecom firm for aiding the expansion of Israeli settlements in the West Bank.




The Norges Bank Executive Board has decided to expunge British steel producer Evraz and Israeli telecoms company Bezeq from the portfolio of Norway’s $1.8 trillion Government Pension Fund Global.. The pension giant is excluding Evraz for allegedly aiding Russia in its war against Ukraine, while Bezeq is accused of helping expand illegal Israeli settlements in the West Bank.

Both decisions were made based on the recommendations of the Council on Ethics, which is an independent body that evaluates whether companies in the GPFG’s portfolio meet its ethical standards.

The Council said in its recommendation to exclude Evraz that the British steel producer has been accused of supplying steel to the Russian arms industry from its Russia-based operations and “rests on the company’s contribution to maintaining Russia’s unlawful war of aggression against Ukraine.” The recommendation noted that after Russia invaded Ukraine in February 2022, Norway’s Ministry of Finance decided that the pension giant exit Russian holdings.

According to the recommendation, Evraz signed a contract to supply steel to Uralvagonzavod, one of the world’s largest producers of combat vehicles. It also cited media reports that Evraz subsidiaries have provided steel, vanadium, and the chemical toluene – which can be used to make ammunition – to state-controlled factories that arm Russian soldiers.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

The Council on Ethics reported it has contacted Evraz, but the company did not respond. As of the end of 2023, the GPFG owned 0.96% of the company’s shares. However, the fund has not yet been able to sell the shares “due to sanctions and operational issues.” Trading in shares of Evraz have been suspended since March 2022.

Norges Bank said it also decided to exclude Israeli telecommunication company Bezel for allegedly “helping to facilitate the maintenance and expansion” of Israeli settlements in the West Bank. The recommendation said that by providing telecom services to Israeli settlements in the West Bank, Bezel is “contributing to the violation of international law.”

The Council noted that since the terrorist attack on Israel Oct. 7, 2023, there has been a sharp increase in settler violence, forced relocation, and the arrest of Palestinians in the West Bank. “Much of this may be linked to the Israeli settlements,” the recommendation said. “The Israeli government has also announced plans to expand the settlements and further increase the influx of settlers to the West Bank.”

As of the end of June, the GPFG owned 0.76% of Bezel’s shares.

Meanwhile the central bank’s executive board decided to remove from observation Hyundai Engineering & Construction. The South Korean construction engineering firm had been under observation since July 2021 related to “an unacceptable risk that the company has contributed to or been responsible for gross corruption.”

However, the Council noted that the company has since implemented an anti-corruption system that is mainly aligned with internationally recognized recommendations. “Hence, the risk of gross corruption in the company’s operations is no longer considered unacceptable,” the recommendation said.

 

Related Stories:

Norway’s Central Bank Adds 3 Firms to Government Pension Fund Global’s Exclusion List

Norway’s Pension Giant Adds Chinese, Indian Firms to Exclusion List

Norwegian Sovereign Wealth Fund Adds 9 Firms to Exclusion List

 

Tags: , , , , , , , , , , ,

«