Insurtech Root launches investigation into $9.5 mn of marketing services transactions

In an SEC filing, insurtech Root Insurance has shared that it has engaged outside counsel to conduct an internal investigation with respect to a series of marketing services transactions that a former senior marketing employee entered into in 2022.

The internal investigation is ongoing, but the preliminary results indicate that, with respect to one vendor, these transactions involve payments from the company of at least $9.5 million, which Root now believes was subsequently transferred at such former employee’s direction and without prior disclosure to company senior management, from that vendor to entities in which the former employee had an interest.

In addition, with respect to the vendor referred to above, and with respect to other vendors, the investigation continues and may result in the discovery of further fraudulent and/or inappropriate transactions, including transactions that may have caused the company to make payments for marketing services that were not provided or not fully provided and are not expected to be fully provided.

Root will pursue recovery of these funds through all legally available means and cooperate with law enforcement as appropriate.

by Peter Sonner