UnitedHealth Group Chairman Stephen Hemsley and three senior executives netted a combined $101.5 million from stock sales made over four months leading up to when the public became aware of a federal antitrust investigation.
The sales occurred between Oct. 16, a week after the nation's largest health insurer reportedly received notice of the Justice Department probe, and Feb. 26, the day before Bloomberg News and others published stories about the investigation. The stock dropped after the investigation was widely reported.
There’s no indication that the trades were executed according to scheduled trading plans in filings related to the transactions. UnitedHealth said officers and directors must get clearance to trade shares, and that trading is limited to certain windows that often open after earnings reports. The trades in question were approved, a spokesperson said. The company reported third-quarter earnings on Oct. 13.
Typically a company’s general counsel would declare a blackout period barring trading in light of a sensitive investigation, according to John C. Coffee Jr., a corporate governance expert at Columbia Law School. “Apparently, this did not happen” at UnitedHealth, he said in an email.
The DOJ is reviewing whether UnitedHealth’s acquisitions have consolidated its position in some markets in a way that violates antitrust laws, according to a person familiar with the probe who asked not to be identified discussing a nonpublic investigation. The agency has reportedly been looking at potential monopolies in the managed-care industry since at least mid-2023.
UnitedHealth hasn’t explicitly acknowledged the probe and declined to say when Hemsley and the others were informed of it. When asked about the trades, a spokesperson for the insurer said “these directors and officers followed our protocols and received approval from the company.”
UnitedHealth declined to make Hemsley, the other people involved in the trades, or its general counsel available for interviews, and a spokesperson said they had no comment beyond the company’s response.
The company says in regulatory filings that it is subject to “routine, regular and special investigations, audits and reviews” from various state and federal agencies, including the DOJ.
Disclosure question
Shares of UnitedHealth fell 5.2% in two trading sessions on Feb. 27-28, after the probe was widely reported in financial media. It was first reported Feb. 26 in the Examiner News, a local publication in New York state. The stock has fallen about 15% so far this year through Wednesday’s closing price compared with an 8% gain in the S&P 500 Index.
Whether the investigation should have been disclosed to shareholders hinges on if it’s considered material, said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware.
The fact that shares fell after the news leaked “would suggest some materiality to investors,” he said. UnitedHealth says all material information is included in its periodic filings.
Share sales by top leaders are usually vetted by a company’s general counsel, Elson said. They evaluate whether the company must disclose any additional information to the market before the trades occur, he said.
“The question is, when they first were aware of the investigation, was it viewed as material?” Elson said.
Also weighing on the stock is a cyberattack on the company’s Change Healthcare subsidiary. The attack knocked out crucial data and payments systems, sowing chaos throughout the health-care industry.
UnitedHealth operates the largest U.S. health insurer, UnitedHealthcare, and a growing network of clinics, surgery centers, home-care providers and other services under its Optum division. Hemsley has served as chairman since he stepped down as chief executive in 2017 after more than a decade at the helm.
On Oct. 17 and Dec. 5, Hemsley exercised a portion of his stock options set to expire in 2024. He sold the shares he’d acquired the same day, netting him $84.9 million, according to filings.
Brian Thompson, CEO of the UnitedHealthcare insurance unit, on Feb. 16 exercised options and sold shares, netting him $15.1 million, according to Bloomberg calculations. Days later, Chief Accounting Officer Tom Roos sold shares worth about $450,000.
Chief People Officer Erin McSweeney on Oct. 16 exercised options and offloaded shares for a net gain of $1.09 million, filings show.
Hemsley’s options were set to expire in February and November 2024, the filings show. The options held by Thompson and McSweeney had several years left until expiration.
While it’s not unusual for executives to periodically sell shares, Hemsley rarely sold stock while he served as CEO. Starting in 2020, he began offloading at irregular intervals: three times that year and again in 2021, then once in 2022, filings show. His net proceeds from each transaction have ranged from around $13 million to as much as $70 million. The Oct. 17 transaction, which netted him $55.7 million, is among the biggest he’s done in recent years.
Hemsley remains a significant UnitedHealth shareholder with more than 1 million shares valued at more than $450 million, held directly and in trusts, according to data compiled by Bloomberg. Each of the three executives also still hold shares in the company.
McSweeney and Roos have occasionally sold shares in recent years. This is the first year that Thompson has sold shares since he became CEO of the insurance division in 2021, at which point he had to start reporting his transactions.
An upstart synagogue is poised to take over a former health services site on the Upper East Side for its first permanent home.
The three-year-old Altneu congregation has purchased 107 E. 70th St. for $34.5 million, according to a deed that appeared in the city register on Monday.
Signing the deed for the Altneu was the synagogue’s president, Alexander Tsigutkin, the founder of AxiomSL, a tech firm known for its risk-management software for bank transactions that’s now owned by Nasdaq.
Tsigutkin went into contract on the building, a five-story edifice with leaded-glass bay windows near Park Avenue, on Feb. 14 and completed the acquisition on March 29, the deed says.
The seller was VNS Health, a nonprofit care group with roots in the 19th century with a rocky recent history. In 2020, the organization settled a years-old case over alleged billing fraud by shelling out a hefty $57 million fine, though VNS refused to admit any wrongdoing in the process.
Dan Savitt, who has served as VNS’s chief executive officer since 2021, handled the transaction for VNS, according to the register.
A VNS spokeswoman did not return an email seeking comment, and an email sent to the synagogue was also not returned. Also an effort to reach Tsigutkin through his former company was unsuccessful.
The Orthodox-focused Altneu, which translates to “old-new” in Yiddish, is led by Rabbi Benjamin Goldschmidt, who was fired in 2021 from a different shul, the nearby Park East Synagogue, after high-profile clashes with its longtime chief rabbi, Arthur Schneier.
Dozens of congregants signed a letter protesting Goldschmidt’s firing, and a year later, Goldschmidt announced that he and his wife, journalist Avital Chizhik-Goldschmidt, had co-founded the Altneu, which has so far been holding services at the Explorers Club on East 70th Street and other borrowed Upper East Side sites.
With its purchase of 107 E. 70th St., the Altneu has acquired a building completed in 1922 as the five-story home of Thomas Lamont, who served as chairman of Wall Street bank J.P. Morgan in the mid-20th century.
After the death of Lamont’s wife, Florence, 177,000-square-foot property was donated in 1954 to the Visiting Nurse Service of New York, the predecessor of VNS Health. (The Lamonts were also the great-grandparents of current Connecticut governor Ned Lamont.)
VNS Health, which offers home-care and hospice services, appears to have used the Tudor Revival brick-and-terracotta building for its offices and also to host fundraisers.
For his part, Tsigutkin, who immigrated to the U.S. from Ukraine in 1980, founded AxiomSL in 1991 and helmed the company until tech buyout group Thoma Bravo snapped it up in 2020 for undisclosed terms.
A year later, Thoma Bravo, which declined to comment, merged the firm with Calypso Technology and gave the combined software company a new name, Adenza Group. Nasdaq bought Adenza in 2023 in a $10.5 billion deal.
Plans to rehabilitate a 20-block section of bike and pedestrian paths and reconstruct a decrepit pier in East Harlem are moving forward. In a presentation to Manhattan Community Board 11 this month, the city unveiled its preliminary design to rebuild and rehabilitate the East River Esplanade between East 94th and East 107th Streets and East [...]
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An almost fully occupied 48-story Midtown office tower at 1633 Broadway houses top money managers, law firms and media outfits. Even so, the Class A building’s cash flow is falling and on Monday a ratings agency downgraded a security holding its mortgage as risk mounts that blue-chip tenants will continue paying less for space.
Citing a drop in “sustainable” cash flow, Fitch Ratings downgraded 1633 Broadway’s mortgage along with loans for an office tower in San Francisco and another in Chicago. The outlook is “negative,” Fitch said in a report.
“Due to performance declines” the loans “are not considered to have credit characteristics consistent with an investment-grade credit opinion,” Fitch said.
Fitch’s move is striking because 1633 Broadway, known as Paramount Plaza, looks to be in robust health by certain measures.
The 2.6 million square-foot property at the corner of West 50th Street is 96% leased, according to a February presentation from landlord Paramount Group. Tenants including Allianz Global Investors, Morgan Stanley, Warner Music Group, and law firm Kasowitz Benson Torres have long-term leases.
Annual cash flow has fallen by 6% since 2020, to $98 million, according to a report released last month by bond-rating firm KBRA. Rental income may come under further pressure soon because leases accounting for 25% of the building's base rent will come due in the next two years.
Showtime Networks, the third-largest tenant at 260,000 square feet, could move out when its lease expires in January 2026. Charter Communications’ 100,000 square-foot lease expires next year. Showtime, a division of Paramount Global, pays about $55 per square foot and Charter $72, KBRA data show. Showtime has five- and 10-year renewal options. Kasowitz Benson has the right to terminate its lease on 150,000 square feet of space this spring, KBRA said in a 2019 report. A spokeswoman for the law firm did not immediately respond to a request for comment.
If the companies stay, they may command lower rates because Fitch said there has been “further weakening” in Midtown leasing since its last assessment 12 months ago.
One piece of good news is 1633 Broadway’s $1.25 billion mortgage, which carries a below-market interest rate of 2.99%, doesn’t have to be refinanced until 2029. At the last financing in 2019 building owner Paramount Group pocketed $140 million of the loan proceeds.
Paramount Group owns about 13 million square feet of commercial space in Manhattan and San Francisco. The real estate investment trust’s stock traded Tuesday for about $4.50 a share. A spokesman didn’t reply to a request for comment.
Leases
Durst inks lease with underwriting firm
Address: 1155 Sixth Ave., Manhattan
Landlord: The Durst Organization
Tenant: Everest Group
Lease size: 66,444 square feet
Lease length: 15 years
Asset type: Office
Brokers: CBRE's Eric Deutsch and Jared Freede represented the tenant. Tom Bow, Rocco Romeo and Nora Caliban represented the landlord in-house.
Sales
Strip mall in Forest Hills changes hands
Address: 104-15 Queens Blvd., Queens
Sellers: Morrow, Korshin, Courtois and Felder families
Buyer: Elishaev family
Sale price: $25 million
Asset type: Retail
Financings
Forest Hills condo scores mortgage
Address: 107-02 Queens Blvd., Queens
Owner: De Boulevard LLC
Lender: Deutsche Bank
Loan amount: $53 million
Asset type: Multifamily
Spear Street Capital obtains financing for SoHo building
Address: 2 Crosby St., Manhattan
Owner: John Grassi
Lender: Security Life of Denver
Loan amount: $21.8 million
Asset type: Office
Fanatics plans to premiere the centerpiece of its new events division with a flagship sports festival in August.
The company is looking to replicate the success of New York Comic Con, the annual fan convention centered around comic book culture, in the sports sector with Fanatics Fest NYC. The three-day event will be held at the Javits Center from Aug. 16 to 18, with tickets going for between $20 and $400.
The top sports leagues in North America are set to participate in the festival, including the National Football League, National Basketball Association, the National Hockey League and Major League Baseball. Fanatics is also bringing in a slate of celebrity talent, such as Peyton and Eli Manning, Tom Brady, Kevin Durant, Derek Jeter, Sabrina Ionescu and Hulk Hogan.
Fanatics’ push into events comes as the company expands beyond its roots in sports merchandise. In recent years, it has barged its way into the trading card and sports betting sectors through licensing deals and acquisitions.
Last year, Fanatics Chief Executive Michael Rubin hired New York Comic Con director and ReedPop executive Lance Fensterman to lead his new events business after raising $700 million from investors including Clearlake Capital Group to enter new categories.
“We have a lot of bedrock to build off of,” Fensterman said in an interview. “When I launched New York Comic Con, we didn’t have anything. We had to go beg, borrow and steal.”
Fanatics Events, a partnership with Endeavor Group Holdings’s IMG, held its first major event in April in Philadelphia with WWE World at WrestleMania, in conjunction with World Wrestling Entertainment.
The city's community boards are the most basic form of democracy that we can all experience up close. Made up of volunteers, primarily advisory, they still play a key role in relaying neighborhood opinions and emotions to our elected officials. This is especially true about land-use issues, which are as crucial as they've ever been in New York City. I should know: I spent roughly 30 years as a member of Community Board 5 in Manhattan, several of them as chair. And so I've watched with a keen eye the recent upheaval occurring there.
To make a long story short, a group of folks frustrated by the slow pace of developing housing in CB5 — which includes most of the Midtown business and Flatiron districts — staged what is essentially a coup d'etat, replacing many long-term board members in leadership positions, many of whom I worked with back in my day. These are hard-working, dedicated folks, and when they resisted plans for new housing — and shared their concerns with our government — they did so out of genuinely held beliefs that it was the right thing to do, and that it was what their neighbors wanted.
Sorry, but democracy is messy. Sometimes new blood, new ideas and new viewpoints are needed. So while I'm sorry for my former colleagues, I want to remind everyone that this is what government is all about. Or least, what it's supposed to be about — the House of Representatives in Washington these days is a bad example of how different sides are supposed to compromise to find solutions. They seem incapable of even talking to each other.
But let's not use that dysfunctional body as an example, because by any standard it's a bad example. Let's remember that there are two or more, sometimes many more, sides to each issue, and sometimes we need to bend to get things done.
I wish the new leaders of CB5 all the luck in the world, although their ascent might have been heavy-handed. And I counsel those who disagree with them or are angry about how they came to power, to put aside those feelings. Work with them. Find solutions. Washington might be a mess, but CB5 doesn't have to be.
Michael Presser is a former chairman of Community Board 5 and is the current executive director of Inside Broadway, a nonprofit that exposes public school students to the world of New York theater.
State lawmakers reached a “conceptual” agreement on the 2025 budget on Monday, according to Gov. Kathy Hochul, who hosted a celebratory press conference touting the deal. Since the bills have not been printed yet, details remain scarce. However, according to the governor, the $237 billion budget, now over two weeks late, includes “landmark” policies to [...]
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