Clover Health, the healthcare company that Chamath Palihapitiya took public last year, has revealed it is under investigation by the Securities and Exchange Commission after a shortseller report alleged its culture “is rooted in deception”.

The company said it had received a notice of the SEC investigation in a blog post published on Friday, where it sought to refute allegations made by Hindenburg Research. Clover said the report “is rife with ad-hominem attacks, sweeping inaccuracies and gross mischaracterisations”.

Shares in Clover, which went public in October via a $3.75bn deal with Mr Palihapitiya’s Social Capital Hedosophia III, closed down 12 per cent on Thursday after Hindenburg, which last year called electric truck start-up Nikola “an intricate fraud” in allegations denied by Nikola, reported that Clover faces an inquiry by the US Department of Justice.

Clover acknowledged the DoJ inquiry, which was not disclosed when it went public via the Spac, but said the company frequently receives inquiries from regulators because of its involvement in Medicare Advantage, the government healthcare plan for older people. Clover said Mr Palihapitiya was aware of the DoJ inquiry when it went public.

In a report published on Thursday, Hindenburg took aim at former Facebook executive Mr Palihapitiya, referring to him as “King of Spacs” and a “Wall Street celebrity promoter”, and claiming he had misled investors about Clover’s business in the run-up to the deal. Hindenburg, which specialises in “short selling” shares, allowing it to profit when prices fall, said it did not have a position in Clover’s stock, either long or short.

Mr Palihapitiya has become one of most prolific Spac founders, with six listed vehicles and three deals under his belt. He frequently posts on Twitter but has made no public statements since Hindenburg published its report and did not respond to a request for comment.

Clover is the third company to go public via a special purpose acquisition vehicle that has been targeted by short-sellers.

Hindenburg last year published a scathing report on Nikola, which Nikola said contained “dozens” of inaccurate allegations, outlining specific examples. Meanwhile, Muddy Waters revealed in November that it is betting against healthcare company Multiplan, one of the largest Spac transactions to date.

Under scrutiny are the so-called “sponsor promotes”, which critics say incentivise executives behind a Spac to strike a deal even if it is not in the best interest of shareholders.

As a private company, Clover had raised more than $900m from investors like Sequoia Capital and GV, a venture capital firm affiliated with Google’s parent company Alphabet, according to PitchBook data. Chelsea Clinton is a member of the company’s board.

Mr Palihapitiya is in the process of merging his fifth Spac with online lender SoFi, in an $8.7bn deal that is expected to close in the first quarter. Shares in the Spac, IPOE, fell after the publication of the Hindenburg report on Clover.