Aetna Inc (NYSE: AET) Investor Securities Class Action Lawsuit 01/25/2017
January 25, 2017 - An investor in shares of Aetna Inc (NYSE: AET) filed a lawsuit in the U.S. District Court for the District of Connecticut over alleged violations of Federal Securities Laws by Aetna Inc in connection with certain allegedly false and misleading statements made between August 15, 2016 and January 20, 2017.
According to the complaint the plaintiff alleges on behalf of purchasers of Aetna Inc (NYSE: AET) common shares between August 15, 2016 and January 20, 2017, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between August 15, 2016 and January 20, 2017 the defendants made false and/or misleading statements and/or failed to disclose that the Company and its senior executives attempted to leverage Aetna Inc's participation in the Public Exchanges for favorable treatment from regulators regarding the Humana acquisition, that the Company threatened to limit its participation in public health insurance exchanges if the Department of Justice ("DOJ") attempted to block the merger, that Aetna Inc did not withdraw from certain public health insurance exchanges for business reasons as Defendants claimed, but to follow through on its threat of leaving the marketplace once the DOJ filed suit and to improve its litigation position, that Aetna Inc withdrew from public health insurance exchanges that were profitable for the Company, and that as a result of the foregoing, defendants' statements about Aetna Inc's business, operations, and prospects were false and misleading and/or lacked a reasonable basis.
Aetna Inc reported that its annual Total Revenue rose from over $58 billion in 2014 to over $60.33 billion in 2015 and that its Net Income increased from over $2.04 billion in 2014 to over $2.39 billion in 2015.
On July 2, 2015, Aetna Inc entered into a definitive agreement to acquire Humana Inc. (“Humana”) in a transaction valued at approximately $37 billion (the “Humana Acquisition”).
On July 21, 2016, the U.S. Department of Justice (“DOJ”), eight states, and the District of Columbia filed a civil complaint against Aetna Inc and Humana in the U.S. District Court for the District of Columbia asserting that the proposed Acquisition of Humana Inc by Aetna Inc would violate antitrust laws and seeking a permanent injunction to prevent the acquisition from moving forward. One of the main issues raised by the DOJ was Aetna Inc and Humana’s commitment to the Affordable Care Act’s Public Exchanges. According to the DOJ, the proposed merger would lead to a loss of competition on the public exchanges in 17 counties in Georgia, Missouri, and Florida, counties in which Aetna Inc and Humana both compete.
On August 15, 2016, less than one month after the DOJ filed suit, Aetna Inc’s Chairman and Chief Executive Officer (“CEO”), Mark T. Bertolini (“Bertolini”), announced that Aetna Inc would withdraw its participation in 11 of its 15 state Public Exchanges beginning in 2017, including the Company’s participation in the 17 counties identified by the DOJ.
Shares of Aetna Inc (NYSE: AET) grew from $66.76 per share in February 2014 to as high as $133.49 per share in December 2016.
However, the plaintiff claims that nevertheless, between August 15, 2016 and January 20, 2017, the defendants informed investors that their decision to withdraw Aetna from multiple Public Exchanges was purely a business decision aimed at reducing financial losses.
On January 23, 2017, Judge John D. Bates of the U.S. District Court for the District of Columbia entered a Memorandum Opinion enjoining the proposed merger between Aetna Inc and Humana after finding, inter alia, that Aetna Inc’s senior executives “did not view withdrawing from the 17 compliant counties as a business decision,” but rather as a way of improving Aetna Inc’s litigation position. The court also noted that Aetna Inc “tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed merger” by threatening to reduce its Public Exchange participation in 2017 and beyond if the “DOJ sues to enjoin the transaction.”
Shares of Aetna Inc (NYSE: AET) declined on January 24, 2017 to $116.56 per share.
On January 25, 2017, NYSE: AET shares closed at $119.14 per share.