UnitedHealth Execs Sell $101.5M in Stock, Trigger SEC Probe Call

Key Takeaway

• Lawmakers, led by Senator Elizabeth Warren, request an SEC probe into UnitedHealth executives' $101.5 million stock sales before an antitrust investigation was public.
• The sales occurred between October and February, preceding a 5.2% drop in UnitedHealth's shares after the investigation news broke.
• UnitedHealth asserts all trades were compliant with SEC rules, amidst scrutiny from US antitrust regulators and political figures.

Lawmakers Call for SEC Investigation

Democratic US lawmakers, spearheaded by Senator Elizabeth Warren of Massachusetts, have formally requested the Securities and Exchange Commission (SEC) to investigate stock sales by UnitedHealth Group Inc.’s chairman and three executives. The officials in question reportedly sold stock worth a combined total of $101.5 million. These transactions took place after the company was allegedly informed of an antitrust investigation but before this information was made public, as reported by Bloomberg News. "The reports regarding these trades reveal a disturbing fact pattern," the lawmakers emphasized in their letter to SEC Chairman Gary Gensler.

Timing of Stock Sales Under Scrutiny

The stock sales occurred between October, the period when UnitedHealth was purportedly notified of the antitrust investigation, and February, when the probe was disclosed in the media. Following the public reports of the investigation, UnitedHealth's shares experienced a 5.2% decline over two trading sessions. The lawmakers' inquiry to the SEC seeks to determine whether the antitrust investigation was material information for UnitedHealth's investors and if the company's disclosures were adequate. UnitedHealth, while not directly acknowledging the probe, has stated in regulatory filings that it is subject to various investigations, audits, and reviews by state and federal agencies, including the Justice Department.

UnitedHealth's Response

In response to the allegations, UnitedHealth has stated that its protocols for trading company stock are designed to ensure compliance with all SEC trading rules and regulations. According to the company, all the officials implicated in the stock sales adhered to these protocols and received approval from the company for their trades. This statement comes amid reports that US antitrust regulators have been examining the managed care industry since mid-2023.

Political and Regulatory Context

Senator Elizabeth Warren, a known critic of health insurers and UnitedHealth in particular, has urged regulators to scrutinize the company's business dealings closely. Warren, who is a member of the Senate Finance Committee, is expected to participate in a hearing that will feature testimony from UnitedHealth Chief Executive Officer Andrew Witty. The hearing will address a cyberattack at the company’s Change Healthcare subsidiary. The letter to the SEC was co-signed by more than a dozen lawmakers, including Representative Jake Auchincloss and Senator Edward Markey, both of Massachusetts, highlighting the political interest in the matter.

Management Quotes

• UnitedHealth spokesperson:

  "Our protocols for trading company stock include restrictions and processes that ensure the company complies with all SEC trading rules and regulations. All of the officials followed these protocols and received approval from the company."