Florida Health Insurance CEO Charged With Investment Fraud
On July 20th, 2022, the Securities and Exchange Commission (SEC) announced investment fraud charges against Health Insurance Innovations (HII) and its former Chief Executive Officer (CEO) Gavin Southwell. A Florida resident, Mr. Southwell served as the health insurance carrier’s CEO from November of 2016 through April of 2021. In this blog post, our Miami investment fraud lawyer provides an overview of the charges against the health insurance executive.
HII and CEO Gavin Southwell Made Material Misrepresentations to Investors
According to the SEC complaint, Health Insurance Innovations (HII) and its former Chief Executive Officer (CEO) Gavin Southwell violated the Securities Act of 1933 and the Securities Exchange Act of 1934. HII offers technology services, billing services, and short-term/limited nature health insurance products to consumers. The company solicited funding from investors.
In raising money from investors, HII and its CEO Gavin Southwell made representations that the company has a 99.99 percent satisfaction rating from its customers. It also informed actual and prospective investors that the company state-based insurance regulators around the country had received very few complaints about the firm.
However, the SEC alleges that the reality was far different. According to information raised by the SEC in its civil investment fraud complaint, HII had received tens of thousands complaints from customers who were dissatisfied with their services. The customers alleged that HII made serious misrepresentations in marketing its health insurance coverage.
Material Misrepresentations Harm Investors
Investors have a right to get good faith and reasonably accurate disclosure from companies and their corporate leadership. A material misrepresentation—a significant and inaccurate disclosure of relevant information—has the potential to cause serious harm to investors. As the SEC noted in its legal complaint, investors in health insurance companies and in health industry companies more broadly have a right to access accurate information about customer satisfaction. How customers actually rate products/services are an important consideration for investors.
SEC Imposed All Appropriate Sanctions Against HII and Former CEO Gavin Southwell
As part of its civil enforcement action, the SEC is seeking to impose all appropriate legal sanctions against HII and its former CEO Gavin Southwell. The company and Mr. Southwell reached a comprehensive civil settlement with the SEC. Without admitting to or denying wrongdoing, the agreement required HII and Mr. Southwell to consent to the penalties. HII will pay $10 million in fines and disgorgement of ill-gotten gains. For his part, Mr. Southwell will pay an additional $1 million in financial penalties. A cease-and-desist order has also been issued to prohibit any further violations of securities law.
Speak to a Miami Securities Fraud Attorney Today
At Carlson & Associates, P.A., we advocate for the rights and interests of investors. If you or someone close to you suffered losses due to securities fraud, we are here to help you find the best solution. Give us a call today to arrange a completely confidential review of your legal case. We have a law office in Miami and our attorneys represent investors in South Florida and beyond.