Clover Health Investments (CLOV) and the special purpose acquisition company (SPAC) led by Chamath Palihapitiya that took the tech-focused healthcare company public in January came under attack on Thursday based on claims by Hindenburg Research.

The report claims that Clover unfairly lured retail investors into purchasing shares while failing to disclose that it was under active investigation by the Department of Justice.

Shares of Clover were down over 10% in early trading following the report.

While Hindenburg is known as a short seller, it says that it has taken no position in Clover, long or short. “Why? Because while short selling is always high risk, these are unprecedented times; many people are angry and right now we believe it is important to demonstrate the role short sellers play in a healthy, functioning market,” said Hindenburg.

Clover, which sells Medicare insurance, has a mission of serving “low-income and often overlooked communities.” According to Hindenburg, a civil investigative demand letter shows that the Department of Justice is investigating 12 issues related to Clover, including its software “Clover Assistant,” as well as kickbacks, marketing practices, and undisclosed third-party deals.

“This Civil Investigative Demand and the corresponding investigation present a potential existential risk for a company that derives almost all of its revenue from Medicare, a government payor,” Hindenburg said in its report, which came after four months of investigating Clover.

Hindenburg goes on to describe a relationship between Clover and its subsidiary Seek Insurance as “thinly disclosed,” noting that it doesn’t mention the subsidiary on its website yet tells seniors that it will provide them with unbiased information on finding Medicare plans.

“Seek makes no mention of its relationship with Clover on its website yet misleadingly advertises to seniors that it offers ‘independent’ and ‘unbiased’ advice on selecting Medicare plans,” Hindenburg writes. “It claims, ‘We don’t work for insurance companies. We work for you’, despite literally being owned by Clover, an insurance company. Its activities are also under investigation by the DOJ.”

Hindenburg says its report is based on “more than a dozen interviews with former employees, competitors, and industry experts,” along with government reports and insurance filings.

Investor and venture capitalist Chamath Palihapitiya helped take Clover public on January 8 through Social Capital Hedosophia Holdings Corp III, a special purpose acquisition company (SPAC).

The Department of Justice declined to comment about Hindenburg’s claims.

Comment was also requested from Clover Health and Chamath Palihapitiya’s firm Social Capital to respond to Hindenburg’s claims, and Yahoo Finance did not receive responses before publication of this story.

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Alexis Keenan is a legal reporter for Yahoo Finance and former litigation attorney. Follow Alexis Keenan on Twitter @alexiskweed.

Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre

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