Health Insurance Innovations, Inc.
On November 27, 2018, Aurelius Value published a report stating, among other things, that "[p]reviously sealed documents gathered by the FTC directly undermine management's claims and prove that a large boiler room operation recently shuttered by the government for a massive alleged fraud was responsible for roughly half of HIIQ's sales. Evidence also suggests that HIIQ policies have been contaminated by insurance fraud and reveal that other HIIQ brokers prey on consumers with falsehoods." On this news, shares of HIIQ fell $1.93 per share, or over 5.8%, on November 27, 2018, thereby damaging investors. The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that a substantial portion of the Company's revenues were derived from third parties; (2) that these third parties used deceptive tactics to sell the Company's policies, including overstating the policy's coverage and/or selling under the licenses of employees who had no involvement in the underlying sales; (3) that regulatory scrutiny of these third parties would materially impact the Company's operations; and (4) that, as a result of the foregoing, Defendants positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis.