Hollywood Firefighter Pension Lawsuit Alleges Insider Trading by United Health Executives
A recent lawsuit filed by the City of Hollywood Firefighters’ Pension Fund alleges that the late UnitedHealthcare CEO Brian Thompson, along with two other executives, engaged in insider trading in 2023. According to the claim filed on May 15, Thompson, UnitedHealth Group CEO Andrew Witty, and UnitedHealth Group executive chairman Stephen Hemsley offloaded millions of dollars in company stock upon learning about the DOJ’s renewed antitrust investigation into UnitedHealth’s acquisition of Change Healthcare in October 2023.
This legal action, titled City of Hollywood Firefighters’ Pension Fund V. UnitedHealth Group, Andrew Witty, Stephen Hemsley, and Brian Thompson, was submitted to the U.S. District Court in the District of Minnesota. It aims to represent shareholders who purchased UnitedHealth Group stock between March 14, 2022, and February 27, 2024. The lawsuit alleges that insiders, including Thompson and the mentioned executives, sold over $120 million in stock after becoming privy to the DOJ investigation, which only became public knowledge following a news report on February 27.
Hemsley reportedly sold $102 million in shares, while Thompson sold $15 million during this period. The claim states that despite their advanced knowledge of the investigation, investors and the general public were not informed. The Hollywood Firefighters Pension Fund, valued at $300 million, claims it suffered financial damages due to the company’s falling stock and is seeking compensatory damages from the defendants.
As of January 31, 2024, UnitedHealth Group had over 921 million shares and numerous investors. The accused executives have not provided any comment, nor have the law firms representing the plaintiff. The DOJ’s antitrust concerns originated from UnitedHealth’s proposed acquisition of Change Healthcare in January 2021, with the DOJ filing a lawsuit in February 2022 opposing the merger.
Despite UnitedHealth’s assurances to maintain a firewall between Optum and UnitedHealthcare, the claim states that this segregation was not appropriately enforced, leading to the sharing of sensitive information. In February, UnitedHealth faced a revived DOJ investigation into this matter, resulting in a significant drop in shareholder value, according to reports.
UnitedHealthcare’s CEO Brian Thompson was tragically murdered in New York City. Investigations into his murder are ongoing. This case sheds light on the intricacies of insider trading and corporate governance, bringing transparency and accountability to the forefront of the finance and securities industry.
