# UNITED STATES OF AMERICA

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URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3A80198c54962f4069

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING
File No. 3-20932

:
In the Matter of
:
:
Health Insurance Innovations, Inc., :
now named Benefytt Technologies, :
Inc., and Gavin D. Southwell,
:
:
Respondents.
:
I.

PROPOSED PLAN OF
DISTRIBUTION

OVERVIEW

1.
The Division of Enforcement submits this Proposed Plan of Distribution (the
“Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant
to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (the
“Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair
Fund (the “Fair Fund”), comprised of disgorgement, prejudgment interest, and civil money
penalties paid by Health Insurance Innovations, Inc., now named Benefytt Technologies, Inc.
(“HII”) and Gavin D. Southwell (collectively, the “Respondents”) in the above-captioned
matter.1
2.
As described more specifically below, the Plan seeks to compensate investors
who were harmed, by the Respondents’ conduct described in the Order, in connection with
Respondents’ series of false and misleading statements to investors, which concealed extensive
consumer complaints about products being sold through misrepresentations. As calculated using
the methodology detailed in the Plan of Allocation (attached as Exhibit A), investors will be
compensated for losses on shares of HII common stock registered with the Commission and
traded under the symbol HIIQ (the “Security”) purchased or acquired during the period when the
stock price was inflated by the company’s false and misleading statements, from March 2, 2017
through March 12, 2019, inclusive (the “Relevant Period”). In the view of the Commission staff
and the Fund Administrator, this methodology constitutes a fair and reasonable allocation of the
Fair Fund.

1

See Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and
Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order,
Securities Act Rel. No. 11084 (July 20,2022) (the “Order”).

3.
The Commission has custody of the Fair Fund and shall retain control of the
assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission
retains jurisdiction over its implementation.
II.

BACKGROUND

4.
On July 20, 2022, the Commission issued the Order instituting and
simultaneously settling cease-and-desist proceedings against the Respondents. In the Order, the
Commission found that from March 2017 through March 2020, HII, a technology platform,
billing administrator and distributor of short-term and limited health insurance products, and its
CEO Southwell made a series of false and misleading statements to investors, which concealed
extensive consumer complaints about products being sold through misrepresentations. HII and
Southwell falsely told investors that HII held its insurance distributors to its high compliance
standards, which prohibited insurance agents from making misrepresentations to consumers. HII
and Southwell falsely stated that HII had 99.99% consumer satisfaction and misleadingly stated
that state departments of insurance received very few consumer complaints regarding HII. HII
and Southwell understated the amount of business that had been generated by its most productive
distributor, Simple Health Plans LLC (“Simple Health”), which amassed the most consumer
complaints. HII and Southwell misrepresented that HII had terminated its relationship with a
different distributor in 2016 for compliance failures, when in fact, HII re-hired this distributor
despite continuing compliance problems. These statements were made in reports filed with the
Commission, press releases, earnings calls and other communications with investors. Southwell
also disseminated misleading information about HII’s compliance to research analysts and a
subscription news service, which included the information in research reports and a news article
that were distributed to investors. In total, the Commission ordered the Respondents to pay
$320,000 in disgorgement, $41,511 in prejudgment interest, and $11,750,000 in civil money
penalties, for a collective total of $12,111,511, to the Commission. The Commission also
created the Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the
penalties paid, along with the disgorgement and interest paid, can be distributed to harmed
investors.
5.
The Respondents have paid in full. The Fair Fund has been deposited in a
Commission-designated account at the United States Department of the Treasury, and any
accrued interest will be added to the Fair Fund.
III.

DEFINITIONS
As used in this Plan, the following definitions will apply:

6.
“Administrative Costs” shall mean any administrative costs and expenses to be
paid from the Fair Fund, including without limitation the fees and expenses of the Tax
Administrator and the Fund Administrator, tax obligations, bond premium expenses, and
investment and banking costs.
7.
“Claim Form” means the form designed by the Fund Administrator, in
consultation with the Commission staff, for the filing of claims in accordance with this Plan.

2

The claim form will require, at a minimum, sufficient documentation reflecting any Preliminary
Claimant’s purchases and dispositions of Security during the Relevant Period such that eligibility
under the Plan can be determined, tax identification and other related information from the
Preliminary Claimant as determined necessary by the Fund Administrator in coordination with
the Tax Administrator, and a certification that the Preliminary Claimant is not an Excluded Party.
8.
“Claim Status Notice” means the notice sent by the Fund Administrator within
sixty (60) days of the Claims Bar Date to any Preliminary Claimant that submitted a deficient
Claim Form. The Claim Status Notice will provide to each Preliminary Claimant whose claim is
deficient, in whole or in part, the reason(s) for the deficiency and in the event the claim is denied,
the Claim Status Notice will state the reason(s) for such denial. The Claim Status Notice will
also notify the Preliminary Claimant of the opportunity to cure any deficiency, request
reconsideration, or dispute the determination made by the Fund Administrator and provide
instructions regarding what is required to do so.
9.
“Claims Bar Date” means the date established in accordance with this Plan by
which a Preliminary Claimant’s Claim Form must be postmarked or submitted electronically in
order to receive consideration under the Plan. The Claims Bar Date shall be ninety (90) days
after the initial mailing of the Plan Notice. Claim Forms submitted by Preliminary Claimants
postmarked or received after the Claims Bar Date will not be accepted unless the Fund
Administrator is directed to do so by the Commission staff.
10.
“Claims Packet” means the materials relevant to submitting a claim that will be
provided to Preliminary Claimants who request such materials through a website or otherwise
prior to the Claims Bar Date. The Claims Packet will include, at a minimum, a copy of the Plan
Notice and a Claim Form (together with instructions for completion of the Claim Form).
11.
“Distribution Payment” means a payment from the Fair Fund to a Payee in
accordance with the terms of this Plan.
12.
“Eligible Claimant” means a Preliminary Claimant, who is not an Excluded
Party, who submitted a valid Claim Form and has suffered a Recognized Loss, as calculated in
accordance with the Plan of Allocation.
13.

“Excluded Party” shall mean:
(a)

The Respondents;

(b)

Present or former officers or directors of Respondents or any assigns,
creditors, heirs, distributees, spouses, parents, dependent children or
controlled entities of any of the foregoing Persons or entities;

(c)

Any employee or former employee of the Respondents or any of its
affiliates who has been terminated for cause or has otherwise resigned, in
connection with the conduct described in the Order;

3

(d)

Any Person who, as of the Claims Bar Date, has been the subject of
criminal charges related to the conduct described in the Order or any
related Commission action;

(e)

Any firm, trust, corporation, officer, or other entity in which Respondents
has or had a controlling interest;

(f)

The Fund Administrator, its employees, and those Persons assisting the
Fund Administrator in its role as the Fund Administrator; or

(g)

Any purchaser or assignee of another Person’s right to obtain a recovery
from the Fair Fund for value; provided, however, that this provision shall
not be construed to exclude those Persons who obtained such a right by
gift, inheritance or devise.

The Claim Form will require claimants to certify that they are not an Excluded Party. All
Excluded Parties will be deemed ineligible to participate in the distribution of the Fair Fund.
14.
“Fair Fund” means the fund created by the Commission pursuant to Section
308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondents’
violations described in the Order.
15.
“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,
less Administrative Costs.
16.
“Payee” means an Eligible Claimant whose Recognized Loss calculates, in
accordance with the Plan of Allocation, to a distribution amount equal to or greater than $10.00
who will receive a Distribution Payment.
17.
“Person” means natural individuals as well as legal entities such as corporations,
partnerships, or limited liability companies.
18.
“Plan Notice” means a written notice from the Fund Administrator to Preliminary
Claimants informing them of the Fair Fund; the Plan and its eligibility requirements; explaining
how to submit a claim, including instructions for any online claims process; and how to obtain a
copy of the approved Plan and Claim Form by request or from the Fair Fund’s website. The Plan
Notice will also be available on the Fair Fund’s website that is maintained by the Fund
Administrator.
19.
“Plan of Allocation” means the methodology used by the Fund Administrator to
calculate if a Preliminary Claimant has suffered a Recognized Loss. The Plan of Allocation is
attached as Exhibit A.
20.
“Preliminary Claimant” shall mean a Person, or their lawful successors,
identified by the Fund Administrator as having a possible claim to recover from the Fair Fund

4

under this Plan, or a Person asserting prior to the Claims Bar Date that he, she, or it has a
possible claim to recover from the Fair Fund under this Plan, as a result of transactions in the
Security during the Relevant Period.
21.
“Recognized Loss” means the amount of loss calculated in accordance with the
Plan of Allocation.
22.
“Relevant Period” means the period of time from March 2, 2017 through
March 12, 2019, inclusive. This is the period over which HII’s stock price was inflated by the
company’s false and misleading statements, as could be measured by Commission staff.
23.
“Security” refers to shares of HII common stock registered with the Commission
and traded under the symbol HIIQ during the Relevant Period.
24.
“Summary Notice” means the notice published in print or internet media that
shall include, at a minimum, a statement of the purpose of the Fair Fund and the Plan, the means
of obtaining a Claims Packet, and the Claims Bar Date. The Summary Notice will be published
via PR Newswire and Investor Business Weekly once a week for three consecutive weeks
starting within ten (10) days of the initial mailing of the Plan Notice.
25.
“Third-Party Filer” means a third-party, including without limitation a nominee,
custodian, or an intermediary holding in street name, who is authorized to submit and submits a
claim(s) on behalf of one or more Preliminary Claimants. Third-Party Filer does not include
assignees or purchasers of claims that are excluded from receiving Distribution Payments under
paragraph 13(g) above.
IV.

TAX COMPLIANCE

26.
On December 1, 2022, the Commission appointed Miller Kaplan Arase LLP as
the tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of
the Fair Fund.2 The Tax Administrator will be compensated for reasonable fees and expenses
from the Fair Fund in accordance with its 2022-2024 Engagement Letter Agreement with the
Commission.3
27.
The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section
468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related
regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the
administrator of such QSF, for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the
tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not
limited to:

2

See Order Appointing Tax Administrator, Exchange Act. Rel. No. 96435 (Dec. 1, 2022).
See Omnibus Order Directing the Engagement of Two Tax Administrators for Appointment on a Case-By-Case
Basis in Administrative Proceedings that Establish Distribution Funds, Exchange Act Rel. No. 94845 (May 4, 2022).
3

5

(a)

Obtaining a taxpayer identification number;

(b)

Requesting funds necessary for the timely payment of all applicable taxes,
the payment of taxes for which the Tax Administrator has received funds,
and the filing of applicable returns; and

(c)

Fulfilling any information reporting or withholding requirements required
for distributions from the Fair Fund.

28.
All tax obligations will be paid from the Fair Fund, subject to the review and
approval of Commission staff.
V.

FUND ADMINISTRATOR

29.
On September 18, 2023, the Commission has appointed Epiq Class Action &
Claims Solutions, Inc. (“Epiq”), as the fund administrator for the Fair Fund (the “Fund
Administrator”), and the Fund Administrator has obtained a bond in the amount of
$12,111,511.00, as ordered.4 Pursuant to Rule 1105(a) of the Commission’s Rules, 17 C.F.R. §
201.1105(a), the Fund Administrator may be removed at any time by order of the Commission or
hearing officer.
30.
The Fund Administrator will be responsible for administering the Fair Fund in
accordance with the Plan. This will include, among other things, taking reasonable steps to
identify and contact Preliminary Claimants; obtaining mailing information for Preliminary
Claimants; establishing a website and staffing a call center to address inquiries during the claims
process; developing a claims database; preparing accountings; cooperating with the tax
administrator appointed by the Commission to satisfy any tax liabilities and to ensure
compliance with income tax reporting requirements, including but not limited to Foreign
Account Tax Compliance Act (FATCA); advising Preliminary Claimants of deficiencies in
claims and providing an opportunity to cure any documentary defects; taking antifraud measures,
such as identifying false, ineligible and overstated claims; making determinations under the
criteria established herein as to Preliminary Claimant eligibility; advising Preliminary Claimants
of final claim determinations; disbursing the Fair Fund in accordance with this Plan, as ordered
by the Commission; and researching and reconciling errors and reissuing payments, when
possible.
31.
To carry out the purposes of this Plan, the Fund Administrator is authorized to
make and implement immaterial changes to the Plan upon agreement of the Commission staff. If
a change is deemed to be material by the Commission staff, Commission approval is required
prior to implementation by amending the Plan.
32.
The Fund Administrator may extend any procedural deadline contained in the
Plan for good cause shown, if agreed upon by the Commission staff.
4

See Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 98416 (Sept. 18,
2023).

6

33.
The Fund Administrator is authorized to enter into agreements with third-parties
as may be appropriate or necessary in the administration of the Fair Fund, provided such thirdparties are not excluded pursuant to other provisions of this Plan. In connection with such
agreements, the third-parties shall be deemed to be agents of the Fund Administrator under this
Plan.
34.
The Fund Administrator will be entitled to payment from the Fair Fund of
reasonable fees and expenses, including the bond premium, incurred in the performance of its
duties (including any such fees and expenses incurred by agents, consultants or third-parties
retained by the Fund Administrator in furtherance of its duties).
VI.

ADMINISTRATION OF THE FAIR FUND
Identification of and Notification to Preliminary Claimants

35.
The Fund Administrator will, insofar as practicable, use its best efforts to
identify Preliminary Claimants from a review of trading records, obtaining records from
registered broker-dealers and investment advisors, and seeking information from any other
source available to it. The Fund Administrator may also engage a third-party firm, after
consultation with and approval of the Commission staff, to assist in identifying Preliminary
Claimants to maximize the participation rate in the Fair Fund.
36.
Within forty-five (45) days after Commission approval of the Plan, the Fund
Administrator shall:
(a)

design and submit a Claims Packet, including the Plan Notice and the
Claim Form, to the Commission staff for review and approval;

(b)

create a mailing and claim database of all Preliminary Claimants based
upon information identified by the Fund Administrator;

(c)

run a National Change of Address search to retrieve updated addresses for
all records in the database, thereby ensuring the mailing information for
Preliminary Claimants is up-to-date;

(d)

email and/or mail a Plan Notice to each Preliminary Claimant identified
by the Fund Administrator and to the Fund Administrator’s list of banks,
brokers, and other nominees in accordance with paragraph 41 below;

(e)

establish and maintain a website devoted solely to the Fair Fund. The Fair
Fund’s website, located at
www.HealthInsuranceInnovationsFairFund.com, will make available a
copy of the approved Plan; provide information regarding the claims
process and eligibility requirements for participation in the Fair Fund in
the form of frequently asked questions; include in downloadable form, the

7

Claim Form and other related materials; and such other information the
Fund Administrator believes will be beneficial to Preliminary Claimants;
(f)

establish and maintain a toll-free telephone number, which will be
available on the Fair Fund Website, for Preliminary Claimants to call to
speak to a live representative of the Fund Administrator during its regular
business hours or, outside of such hours, to hear prerecorded information
about the Fair Fund. The toll-free number will be listed on all
correspondence from the Fund Administrator to Preliminary Claimants as
well as on the Fair Fund’s website; and

(g)

establish and maintain a traditional mailing address and an email address
which will be listed on all correspondence from the Fund Administrator to
Preliminary Claimants as well as on the Fair Fund’s website.

37.
The Fund Administrator will publish the Summary Notice on the internet and in
PR Newswire and Investor Business Weekly once a week for three consecutive weeks starting
within ten (10) days of the initial mailing of the Plan Notice.
38.
The Commission staff retains the right to review and approve any material posted
on the Fair Fund’s website, any material mailed, and any scripts used in connection with any
communication with Preliminary Claimants.
39.
In all materials that refer to the Claims Bar Date, the filing deadline will be
clearly identified with the calendar date, which is ninety (90) days from the date of the initial
mailing of the Plan Notice.
40.
The Fund Administrator will make the Plan Notice available on the Fair Fund’s
website, and will promptly provide a Plan Notice and/or Claim Form to any Preliminary
Claimant upon request made via mail, phone, or email prior to the Claims Bar Date.
41.
The Fund Administrator will make the Plan Notice available on the Fair Fund’s
website. The Fund Administrator will send by mail, email, or other means, the Plan Notice to
the Fund Administrator’s list of banks, brokers, and other nominees, as well as any other
institutions identified during the outreach process, that may have records of the Security during
the Relevant Period (collectively, the “Nominees or Custodians”). The Fund Administrator will
request that these entities, to the extent that they were record holders for beneficial owners of the
Security:
(a)

within fourteen (14) days of the Nominees’ or Custodians’ receipt of the
Plan Notice, notify and send the Plan Notice to the respective beneficial
owners, and, as requested, provide to the beneficial owners a Claim Form,
so that the beneficial owners may timely file a claim. The burden will be
on the Nominees or Custodians to ensure the claims process information,
including, if requested, the Claims Packet and other relevant materials, is
properly disseminated to the beneficial owners; and/or

8

(b)

provide to the Fund Administrator, within fourteen (14) days of receipt of
the Plan Notice, a list of last known names and addresses for all beneficial
owners for whom/which they purchased, or acquired, as the record holder,
the Security during the Relevant Period, so that the Fund Administrator
can communicate with the beneficial owners directly.

42.
At the discretion of the Fund Administrator, in consultation with the Commission
staff, a reasonable number of additional copies of the Claims Packet shall be made available to
any Nominee or Custodian requesting it for the purpose of distribution to beneficial owners.
43.
Requests to the Fund Administrator for additional copies of the Claims Packet in
excess of 2,500 are subject to approval by the Fund Administrator, in consultation with the
Commission staff.
44.
Documented reasonable out-of-pocket expenses incurred by the Nominees or the
Custodians, which would not have been incurred but for compliance with paragraph 41 above,
shall be reimbursed from the Fair Fund. The amount of such expenses allowed will be at the
discretion of the Fund Administrator, in consultation with the Commission staff. Unless
otherwise determined by the Fund Administrator in consultation with the Commission staff, outof-pocket expenses based on the following rates will be considered reasonable:
(a)

a maximum of $0.08 per Claims Packet, plus postage at the pre-sort
postage rate per Claim Packet actually mailed;

(b)

a maximum of $0.05 per email of Summary Notice or Plan Notice and
Claim Form link disseminated; or

(c)

$0.20 per name, address, and email address provided to the Fund
Administrator, up to a maximum of amount of $1,500.00.

45.
The Fund Administrator will attempt to locate any Preliminary Claimant whose
mailing is returned as “undeliverable” and will document all such efforts. The Fund
Administrator shall use its best efforts to make use of commercially available resources and other
reasonably appropriate means to obtain updated addresses in response to “undeliverable” notices,
and forward any returned mail for which an updated address is provided or obtained. The Fund
Administrator will make available, upon request by the Commission staff, a list of all
Preliminary Claimants whose Plan Notice have been returned as “undeliverable” due to incorrect
addresses and for which the Fund Administrator has been unable to locate current addresses.
Filing a Claim
46.
To avoid being barred from asserting a claim, on or before the Claims Bar Date,
each Preliminary Claimant must submit to the Fund Administrator a properly completed Claim
Form reflecting such Preliminary Claimant’s claim, together with all required supporting

9

documentation as the Fund Administrator, in its discretion, deems necessary or appropriate to
substantiate the claim. Without limitation, this information may include third-party documentary
evidence of purchases and dispositions of Security during the Relevant Period, as well as
holdings of Security at pertinent dates.
47.
Electronic claims submission is encouraged; the Plan Notice will include
instructions how Preliminary Claimants can submit their claims electronically via the Fair Fund’s
website. If using the web-based claim filing option, a Preliminary Claimant must submit his, her,
or its claim to the Fund Administrator by 11:59 p.m. EST on the Claims Bar Date. The Plan
Notice will also include instructions for submission of claims if the Preliminary Claimant is
unable to submit his, her, or its claim electronically.
48.
The burden will be upon the Preliminary Claimant to ensure that his, her or its
Claim Form has been properly and timely received by the Fund Administrator. A Claim Form
that is postmarked or otherwise received after the Claims Bar Date will not be accepted unless
the deadline is extended by the Fund Administrator for good cause shown, after consultation
with the Commission staff.
49.
All Claim Forms and supporting documentation necessary to determine a
Preliminary Claimant’s eligibility to receive a distribution from the Fair Fund under the terms of
the Plan must be endorsed by a declaration executed by the Preliminary Claimant under penalty
of perjury under the laws of the United States. The declaration must be executed by the
Preliminary Claimant, unless the Fund Administrator accepts such declaration from a Person
authorized to act on the Preliminary Claimant’s behalf, whose authority is supported by such
documentary evidence as the Fund Administrator deems necessary.
50.
When submitting claims to the Fair Fund on behalf of its clients, all Third-Party
Filers must use the electronic filing template provided by the Fund Administrator in this matter.
Third-Party Filers that do not comply with the template and format provided by the Fund
Administrator may be rejected. Third-Party Filers must also submit a signed master proof of
claim and release, as well as proof of authority to file on behalf of the claimant(s) at the time the
electronic file of transactions is submitted. Failure to do so may result in rejection of the claim.
51.
Each Third-Party Filer must establish the validity and amount of each claim in its
submission. Third-Party Filers must submit such supporting documentary evidence of
purchases, dispositions, and holdings of Security as the Fund Administrator deems necessary or
appropriate to substantiate each individual claim. Without limitation, this includes the complete
name of the Preliminary Claimant (beneficial account owner) and its TIN (for individuals) or
EIN (for companies), sufficient contact information to confirm the identity of the beneficial
owner, and documentation from the original bank, broker or other institution of purchases and
dispositions of Security (account statements, confirmations and other documentation of
purchases and dispositions), as well as holdings of the Security on pertinent dates. The Fund
Administrator will have the right to request, and the Third-Party Filer will have the burden of
providing to the Fund Administrator, any additional information and/or documentation deemed
necessary by the Fund Administrator to substantiate the claim(s) contained in the submission.
Documentation from a Third-Party Filer that is not acceptable to the Fund Administrator will

10

result in rejection of the affected claim(s). The determination of the Fund Administrator to reject
a claim for insufficient documentation, as reflected on the Determination Notice, is final and
within the discretion of the Fund Administrator.
52.
The receipt of Security by gift, inheritance, devise, or operation of law will not be
deemed to be a purchase of Security, nor will it be deemed an assignment of any claim relating
to the purchase of such Security unless specifically so provided in the instrument of inheritance.
The recipient of Security as a gift, inheritance, devise or by operation of law will be eligible to
file a Claim Form and participate in the distribution of the Fair Fund to the extent the original
purchaser would have been eligible under the terms of the Plan. Only one claim may be
submitted with regard to the same transactions in Security, and in cases where duplicative claims
are filed by the donor and donee, the donee claim will be honored, assuming it is supported by
proper documentation.
53.
Claims on behalf of a retirement plan covered by Section 3(3) of ERISA, 29
U.S.C.§ 1002(3), which do not include Individual Retirement Accounts and such plan’s
participants, are properly made by the administrator, custodian or fiduciary of the plan and not
by the plan’s participants. The Fund Administrator will distribute any payments on such claims
directly to the administrator, custodian or fiduciary of the retirement plan. The custodian or
fiduciary of the retirement plan will distribute any payments received in a manner consistent with
its fiduciary duties and the governing account or plan provisions.
54.
The Preliminary Claimant has the burden of notifying the Fund Administrator of a
change in his, her or its current address and other contact information, and of ensuring that such
information is properly reflected on the Fund Administrator's records.
Review of Claims and Deficiency Process
55.
The Fund Administrator will review all claim submissions and determine the
eligibility of each Preliminary Claimant to participate in the Fair Fund by reviewing claim data
and supporting documentation (or the lack thereof) and verifying the claim. Each Preliminary
Claimant will have the burden of proof to establish the validity and amount of his, her or its
claim. The Fund Administrator will have the right to request, and the Preliminary Claimant will
have the burden of providing to the Fund Administrator, any additional information and/or
documentation deemed relevant by the Fund Administrator.
56.
The Fund Administrator will provide a Claim Status Notice within sixty (60) days
of the Claims Bar Date to each Preliminary Claimant who has filed a deficient Claim Form with
the Fund Administrator. The Claim Status Notice will provide to each Preliminary Claimant
whose claim is deficient, in whole or in part, the reason(s) for the deficiency (e.g., failure to
provide required information or documentation). In the event the claim is denied, in whole or in
part, the Claim Status Notice will state the reason(s) for such denial. The Claim Status Notice
will also notify the Preliminary Claimant of the opportunity to cure any deficiency, request
reconsideration, or dispute the determination made by the Fund Administrator and provide
instructions regarding what is required to do so.

11

57.
Any Preliminary Claimant with a deficient claim will have thirty (30) days from
the date of the Claim Status Notice to cure any deficiencies identified in the Claim Status Notice.
58.
Any Preliminary Claimant seeking reconsideration of a denied claim must advise
the Fund Administrator in writing within thirty (30) days of the date of the Claim Status Notice.
All requests for reconsideration must include the necessary documentation to substantiate the
basis upon which the Preliminary Claimant is requesting reconsideration of his, her, or its claim.
59.
The Fund Administrator will have the authority, in its sole discretion, to waive
technical claim deficiencies and approve claims on a case-by-case basis, or in groups of claims.
Claims Eligibility Determination
60.
Within one hundred fifty (150) days of the Claims Bar Date, the Fund
Administrator will complete all claims determinations and send a Determination Notice to all
Preliminary Claimants who timely submitted a Claim Form notifying the Preliminary Claimant
of its eligibility determination. The Determination Notice will further provide to each
Preliminary Claimant that is determined to be an Eligible Claimant with his, her, or its calculated
Recognized Loss. The Determination Notice will constitute the Fund Administrator’s final
ruling regarding the eligibility status of the claim.
61.
The Fund Administrator may consider disputes of an Eligible Claimant’s
Recognized Loss calculation, if presented in writing to the Fund Administrator within fourteen
(14) days of the date of the Determination Notice. The Fund Administrator will consult with
Commission staff as appropriate. The Fund Administrator will notify the Eligible Claimant in
writing with fourteen (14) days of receiving a dispute of its determination, which will constitute
the Fund Administrator’s final ruling regarding the loss calculations for the claim.
Third-Party Review
62.
After the Fund Administrator has completed the process of analyzing the claims
and determining claim amounts in accordance with the Plan, and prior to the distribution of any
funds, the Fund Administrator will engage an independent, third-party firm, not unacceptable to
Commission staff, to perform a set of agreed upon procedures, review a statistically significant
sample of claims and ensure accurate and comprehensive application of the Plan of Allocation.
The Fund Administrator will communicate the results of the review to Commission staff together
with any written analysis or reports related to the review, and, upon request, will make the firm
available to the Commission staff to respond to questions concerning the review.
Distribution Methodology
63.
Any Preliminary Claimant, who is not an Excluded Party, who submitted a valid
Claim Form and has suffered a Recognized Loss, as calculated in accordance with the Plan of
Allocation, will be deemed an Eligible Claimant.

12

64.
No Distribution Payments will be made for less than $10.00. If an Eligible
Claimant’s Recognized Loss, in accordance with the Plan of Allocation, calculates to a
distribution amount less than $10.00, that Eligible Claimant will be deemed ineligible to receive
a Distribution Payment and his, her, or its distribution amount will be reallocated on a pro rata
basis to Eligible Claimants whose distribution amounts are greater than or equal to $10.00. All
Eligible Claimants whose Recognized Loss calculates to a distribution amount equal to or greater
than $10.00 will be deemed a Payee and receive a Distribution Payment.
Establishment of a Reserve
65.
Before determining the amount of funds available for distribution and calculating
each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax
Administrator, will establish a reserve to pay Administrative Costs and to accommodate any
unexpected expenditures (the “Reserve”).
66.
After all disbursements and Administrative Costs are paid, any remaining
amounts in the Reserve will become part of the Residual described in paragraph 89 below.
Preparation of the Payment File
67.
Within sixty (60) days following the date of the Determination Notices described
above, paragraph 60, the Fund Administrator will compile and send to the Commission staff the
Payee information, including the name, address, calculated Recognized Loss, and the amount of
the Distribution Payment for all Payees (the “Payee List”). The Fund Administrator will also
provide a Reasonable Assurances Letter to the Commission staff, representing that the Payee
List: (a) was compiled in accordance with the approved Plan; (b) is accurate as to Payees’ names,
addresses, Recognized Losses and amounts of their Distribution Payment; (c) includes the
number of Payees compensated; (d) the percentage of the Payee’s Recognized Loss being
compensated by the disbursement from the Fair Fund, and if applicable, the total percentage to
include all prior disbursements; (e) the total amount of funds to be disbursed; and (f) provides all
information necessary to make a payment to each Payee.
The Escrow Account
68.
Prior to the disbursement of funds from the Net Available Fair Fund, the Fund
Administrator will establish an escrow account (the “Escrow Account”) with a United States
commercial bank that is a well-capitalized financial institution as defined by the Federal Reserve
Act, Subpart D, 12 C.F.R. 208.43 and that is not unacceptable to the Commission staff (the
“Bank”), pursuant to an escrow agreement (the “Escrow Agreement”) to be provided by
Commission staff.
69.
The Fund Administrator, pursuant to the Escrow Agreement, shall also establish
with the Bank a separate deposit account (e.g. controlled distribution account, managed
distribution account, linked checking and investment account) (the “Distribution Account”),
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC pass

13

through limit. The Distribution Account shall be linked with the Escrow Account and shall be
named, and records maintained, in accordance with the Escrow Agreement.
70. During the term of the Escrow Agreement, the portions of the Fair Fund transferred
to the Escrow Account (the “Escrow Property”), shall be invested and reinvested in short-term
U.S. Treasury securities backed by the full faith and credit of the United States Government or
an agency thereof. The investment shall be, of a type and term necessary to meet the cash
liquidity requirements for payments to Payees, tax obligations, and/or fees of the Tax
Administrator and/or Fund Administrator, including investment or reinvestment in a bank
account insured by the FDIC up to the guaranteed FDIC limit, or in money market mutual funds
registered under the Investment Company Act of 1940 that invest 100% of their assets in direct
obligations of the United States Government.
71. The Fund Administrator shall provide duplicate original bank and/or investment
statements on any accounts established by the Fund Administrator to the Tax Administrator on a
monthly basis and shall assist the Tax Administrator in obtaining mid-cycle statements, as
necessary.
72. The Fund Administrator shall deposit or invest funds in the Escrow and
Distribution Accounts so as to result in the maximum reasonable net return, taking into account
the safety of such deposits or investments. In consultation with Commission staff, the Fund
Administrator shall work with the Bank on an ongoing basis to determine an allocation of funds
between the Escrow and Distribution Account.
73. All interest, dividends, and/or income earned by the Escrow Property will accrue
for the benefit of the Escrow Property. All Administrative Costs associated with the Escrow and
Distribution Accounts will be the responsibility of the Fund Administrator, who may be
reimbursed for said costs as provided in this Plan. No such Administrative Costs may be paid to
the Bank, its agents, and/or its affiliates from the Escrow Property.
Distribution of the Fair Fund
74.
The Fund Administrator will seek to distribute the Net Available Fair Fund to all
Payees only after all Claim Forms have been processed and all Preliminary Claimants whose
claims have been rejected or disallowed, in whole or in part, have been notified and provided the
opportunity to contest or cure pursuant to the procedures set forth herein.
75. Upon the Commission’s staff’s receipt, review, and acceptance of the Payee List
and Reasonable Assurances Letter from the Fund Administrator, the Commission staff will seek
an Order from the Commission pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17
C.F.R. § 210.1101(b)(6), to disburse funds from the Net Available Fair Fund to the Bank in
accordance with the Payee List for distribution by the Fund Administrator in accordance with the
Plan. All disbursements will be made pursuant to a Commission Order.
76. Upon issuance of an Order to disburse, the Commission staff will direct the transfer
of funds in accordance with the Payee List to the Bank. The Fund Administrator will then use its

14

best efforts to commence mailing Distribution Payment checks and/or effect wire transfers
within ten (10) business days of the release of the funds into the Escrow Account. All efforts
will be coordinated to limit the time between the Escrow Account’s receipt of the funds and the
issuance of Distribution Payments.
77.
All Distribution Payments will be issued by the Fund Administrator from the
Distribution Account. All checks will bear a stale date of one hundred twenty (120) days from
the date of issuance. Checks that are not negotiated by the stale date will be voided, and the
Bank will be instructed to stop payment on those checks. A Payee’s claim will be extinguished
if he, she, or it fails to negotiate his, her or its check by the stale date, and the funds will remain
in the Fair Fund, except if a check reissue has been requested before the stale date, such request
is governed by.
78.
All payments will be preceded or accompanied by a communication that includes,
as appropriate: (a) a statement characterizing the distribution; (b) a statement that the tax
treatment of the distribution is the responsibility of each Payee and that the Payee should consult
his, her or its tax advisor for advice regarding the tax treatment of the distribution; (c) a
statement that checks will be void and cannot be reissued after one hundred twenty (120) days
from the date the original check was issued; and (d) contact information for the Fund
Administrator for questions regarding the Distribution Payment. The letter or other mailings to
Payees characterizing a Distribution Payment will be prepared by the Tax Administrator and
Commission staff for review and approval.
79.
All Distribution Payments, either on their face or in the accompanying mailing,
will clearly indicate that the money is being distributed from the Fair Fund established by the
Commission to compensate investors for harm as a result of securities law violations.
80.
Distribution Payments must be made by check or electronic payment payable to
the Payee (the beneficial account owner). A Third-Party Filer shall not be the payee of any
Distribution Payment check or electronic Distribution Payment. Compensation to a Third-Party
Filer for its services may not be paid or deducted from the Distribution Payment.
81.
The submission of a Claim Form and the receipt and acceptance of a Distribution
Payment by a Payee is not intended to be a release of a Payee’s rights and claims against any
party.
82.
Electronic or wire transfers may be utilized at the discretion of the Fund
Administrator to transfer approved Distribution Payments to filers of claims on behalf of twenty
(20) or more Payees. Wire transfers will be initiated by the Fund Administrator using a twoparty check and balance system, whereby completion of a wire transfer will require an
authorization by two members of the Fund Administrator’s senior staff.
83.
At the discretion of the Fund Administrator, certain costs that were not factored
into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s
Distribution Payment. In such situations, the Fund Administrator will immediately notify the
Tax Administrator of the reduction in the Distribution Payment.

15

Post Distribution; Handling of Returned or Uncashed Checks; and Reissues
84.
The Fund Administrator shall use its best efforts to make use of commercially
available resources and other reasonably appropriate means to locate all Payees whose checks
are returned to the Fund Administrator as “undeliverable.” If new address information becomes
available, the Fund Administrator will repackage the distribution check and send it to the new
address. If new address information is not available after a diligent search (and in no event no
later than one hundred twenty (120) days after the initial mailing of the original check) or if the
distribution check is returned again, the check shall be voided and the Fund Administrator shall
instruct the issuing financial institution to stop payment on such check. If the Fund
Administrator is unable to find a Payee’s correct address, the Fund Administrator, in its
discretion, may remove such Payee from the distribution and the allocated Distribution Payment
will remain in the Fair Fund for distribution, if feasible, to the remaining Payees.
85.
The Fund Administrator will reissue checks to Payees upon the receipt of a valid,
written request from the Payee prior to the initial stale date. In cases where a Payee is unable to
endorse a Distribution Payment check as written (e.g., name changes, IRA custodian changes, or
recipient is deceased) and the Payee or a lawful representative requests the reissuance of a
Distribution Payment check in a different name, the Fund Administrator will request, and must
receive, documentation to support the requested change. The Fund Administrator will review the
documentation to determine the authenticity and propriety of the change request. If, in the
discretion of the Fund Administrator, such change request is properly documented, the Fund
Administrator will issue an appropriately redrawn Distribution Payment to the requesting party.
Reissued checks will be void at the later of one hundred twenty (120) days from issuance of the
original check or thirty (30) days from the reissuance, and in no event will a check be reissued
after one hundred twenty (120) days from the date of the original issuance without the approval
of Commission staff.
86.
The Fund Administrator will make reasonable efforts to contact Payees who have
failed to negotiate their Distribution Payment check and take appropriate action to follow up on
the status of uncashed checks at the request of Commission staff. The Fund Administrator may
reissue such checks subject to the time limits detailed herein.
Administrative Costs
87.
All Administrative Costs will be paid from the Fair Fund in accordance with the
Commission’s Rules.
Disposition of Undistributed Funds
88.
If funds remain following the initial distribution and payment of all
Administrative Costs, the Fund Administrator, in consultation with the Commission staff, may
seek subsequent distribution of any available remaining funds, pursuant to the Commission’s
Rules.

16

89.
A residual within the Fair Fund will be established for any amounts remaining
after the final disbursement to Payees from the Fair Fund (the “Residual”). The Residual may
include funds from, among other things, amounts remaining the Reserve, distribution checks that
have not been cashed, checks or electronic payments that were not delivered or returned to the
Commission, and tax refunds received due to the Fair Fund’s overpayment of taxes or for waiver
of IRS penalties.
90.
Once the Fund Administrator, in consultation with the Commission staff, deems
further distribution of the Fair Fund to investors infeasible, the Fund Administrator will direct
any uncashed Distribution Payments to be voided, and return any funds remaining in the Escrow
and Deposit Accounts to the Commission to be added to the Residual.
91.
All funds remaining in the Residual that are infeasible to distribute to investors
will be returned to the Commission and transferred to the U.S. Treasury after the final
accounting is approved by the Commission. Returning such money to Respondents would be
inconsistent with the equitable principle that no Person should profit from their own wrongdoing.
Therefore, in these circumstances, distributing disgorged funds to the U.S. Treasury is the most
equitable alternative.
Filing of Reports and Accountings
92.
In accordance with Rule 1105(f) of the Commission’s Rules, the Fund
Administrator shall provide to the Commission staff a progress report and a quarterly account
statement in a format to be provided by Commission staff, within forty-five (45) days of the
Commission’s approval of the Plan, and shall provide to Commission staff additional reports and
quarterly account statements within ten (10) days after the end of every calendar quarter. Such
progress reports shall inform the Commission staff of the activities and status of the Fair Fund
during the reporting period, and shall specify, at a minimum, the location of the account(s)
comprising the Fair Fund, including among other things, an interim accounting of all monies in
the Fair Fund.
93.
When the final distribution is completed, the Fund Administrator shall provide to
Commission staff a final report summarizing all tasks undertaken and the outcome of its
administrative efforts. The Fund Administrator shall make arrangement for the final payment of
all Administrative Costs, and submit a final accounting of all monies received, earned, spent, and
distributed in connection with the administration of the Plan in a format provided by the
Commission staff. The Fund Administrator will also submit a report to the Commission staff
containing the final distribution statistics regarding distributions to individuals and entities, and
such other information requested by the Commission staff.
Termination of the Fair Fund
94.
The Fair Fund will be eligible for termination and the Fund Administrator will be
eligible for discharge after all of the following have occurred (a) a final accounting, in a standard
accounting format provided by the Commission staff, has been submitted by the Fund
Administrator and approved by the Commission; (b) all Administrative Costs have been paid;

17

and (c) any amount remaining in the Fair Fund has been returned to the Commission for transfer
to U.S. Treasury. Once the Commission has approved the final accounting, the Commission
staff will seek an order from the Commission authorizing: (a) the transfer of any amounts
remaining in the Fair Fund that is infeasible to return to investors, and any amounts returned to
the Fair Fund in the future that are infeasible to return to investors, to the U.S. Treasury, subject
to Section 21F(g)(3) of the Exchange Act; (b) discharge of the Fund Administrator; (c)
cancellation of the Fund Administrator’s bond; and (d) termination of the Fair Fund.
95.
Once the Fair Fund has been terminated and funds, if any, are transferred to the
U.S. Treasury, no further claims will be allowed and no additional payments will be made
whatsoever.
Miscellaneous
96.
When administering this Plan, the Fund Administrator, and/or each of its
designees, agents and assigns, may rely on: all applicable law; orders issued by the Commission,
including orders issued by delegated authority; orders issued by an administrative law judge, if
any, appointed in this proceeding; and any records, including records containing investor
information, provided by Commission staff.
97.
Should any additional funds be received pursuant to Commission or Court order,
agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will
be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, pursuant to the
Commission’s Rules.
Wind-down and Document Retention
98.
The Fund Administrator will shut down the website, P.O. Box and customer
service telephone line(s) established specifically for the administration of the Fair Fund six (6)
months after the transfer of any remaining funds to the Commission, or at such earlier time as the
Fund Administrator determines with the concurrence of the Commission staff.
99.
The Fund Administrator will retain all materials submitted by Preliminary
Claimants in either paper or electronic form for a period of six (6) years from the date of
approval of a final fund accounting. Materials maintained in electronic form must be accessible
and readable for the duration of retention. Pursuant to the Commission staff's direction, the Fund
Administrator will either turn over to the Commission or destroy all materials, including
documents in any media, upon expiration of this period.
VII.

NOTICE AND COMMENT PERIOD

100. The Notice of Proposed Plan of Distribution and Opportunity to Comment (the
“Notice”) will be published on the Commission’s website at
http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan
must do so in writing by submitting their comments to the Commission within thirty (30) days of
the publication of the Notice: (a) to the Office of the Secretary, United States Securities and

18

Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; (b) by using the
Commission’s Internet comment form (www.sec.gov/litigation/admin.shtml); or (c) by sending
an email to rule-comments@sec.gov. Comments submitted by email or via the Commission’s
website should include “Administrative Proceeding File Number 3-20932” in the subject line.
Comments received will be available to the public. Persons should only submit comments that
they wish to make publicly available.

19

Exhibit A
PLAN OF ALLOCATION
This Plan of Allocation1 is designed to compensate investors based on their losses on
shares of Health Insurance Innovations, Inc. common stock registered with the Commission and
traded under the symbol HIIQ (the “Security”) purchased or acquired during the period when
stock price was inflated by the company’s false and misleading statements, from March 2, 2017
through March 12, 2019, inclusive (the “Relevant Period”) due to the misconduct of the
Respondents.2 Investors who did not purchase or acquire shares of the Security during the
Relevant Period or who are an Excluded Party are ineligible to recover under this Plan.
Artificial inflation in the price of the Security over various date ranges surrounding
corrective disclosures and average closing prices of the Security during the “Lookback Period”
(defined below) have been calculated by Commission staff economists and are reflected in Table
A and Table B, respectively.
The Fund Administrator will calculate the amount of loss for each share of the Security
purchased or acquired during the Relevant Period (“Recognized Loss per Share”) as follows:
For each share of the Security purchased or acquired on March 2, 2017 through March
12, 2019, and
A.

Sold prior to November 2, 2018, the Recognized Loss per Share is $0.00.

B.

Sold on or after November 2, 2018, and prior to the close of trading on March 12,
2019, the Recognized Loss per Share is the lesser of:

C.

1.

the amount of inflation per share on the purchase/acquisition date as set
forth in Table A below minus the amount inflation per share on the sale
date as set forth in Table A; or

2.

the purchase/acquisition price minus the sale price.

Sold after the close of trading on March 12, 2019 and prior to the close of trading
on June 10, 2019 (i.e., during the “Lookback Period”), the Recognized Loss per
Share is the least of:
1.

the amount of inflation per share on the purchase/acquisition date as set
forth in Table A; or

1

All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.
The Order states that HII continued to make false and misleading statements through March 2020. Commission
staff economists were unable to determine the amount of inflation, if any, in the stock price after the Congressional
press release announcing an investigation into HII dated March 13, 2019. This date, therefore, serves as the final
corrective disclosure for purposes of measuring stock price inflation in this Plan.
2

1

D.

2.

the purchase/acquisition price minus the sale price; or

3.

the purchase/acquisition price minus the moving average closing price of
the Security on the sale date as set forth in Table B below.

Held as of the close of trading on June 10, 2019, the last day of the Lookback
Period, the Recognized Loss per Share is the lesser of:
1.

the amount of inflation per share on the purchase/acquisition date as set
forth in Table A; or

2.

the purchase/acquisition price minus $25.98, the average closing price of
the Security during the Lookback Period, as shown in the last row in Table
B.

If the Recognized Loss per Share calculates to a negative number, reflecting a gain, the
Recognized Loss per Share will be $0.00.
All prices mentioned in the calculations exclude all taxes, fees and commissions.
Purchases/acquisitions and sales shall be deemed to have occurred on the “contract” or “trade”
date as opposed to the “settlement” or “payment” date.
Additional Provisions
FIFO Methodology: Transactions for an Eligible Claimant who made multiple
purchases/acquisitions and sales of the Security during the Relevant Period will be matched
according to the first-in, first-out (“FIFO”) method. The earliest sales during the Relevant Period
will be matched first against any holdings at the opening of the Relevant Period. Once the
beginning holdings all have been matched, or in the event that there are no beginning holdings,
then any further sales will be matched against the earliest Relevant Period
purchases/acquisitions, and chronologically thereafter.
Acquisitions: The receipt or grant of the Security by gift, devise, inheritance, or
operation of law during the Relevant Period is not considered an eligible purchase if the original
purchase did not occur during the Relevant Period. Shares acquired outside the Relevant Period
will be excluded from the calculation of the Recognized Loss.
Options and Derivatives: Health Insurance Innovation Inc. common stock is the only
security eligible for recovery under this Plan. Option contracts to purchase or sell the Security
are not eligible for recovery under the Plan. With respect to the Security purchased or sold
through the exercise of an option, the purchase/sale date is the exercise date of the call and the
assignment date of the put, and the purchase/sale price is the strike price of the call at the time of
exercise and the strike price of the put at the time of assignment. Transactions in the Security
during the Relevant Period that are pursuant to, or in connection with, a swap or another

2

derivative will not be eligible for a recovery and will be excluded from the Recognized Loss
calculation.
Short Sales: Shares purchased during the Relevant Period to cover short positions held at
the beginning of the Relevant Period or to cover short positions opened during the Relevant
Period will have a Recognized Loss per Share of $0.00. The date of a “short sale” is deemed to
be the date of sale of the Security and the date of covering a “short sale” is deemed to be the date
of purchase of the Security. The earliest Relevant Period purchases will be matched against any
short position existing on the date prior to the start of the Relevant Period until that short position
is fully covered.
Recognized Loss: Recognized Loss will be the sum of the Recognized Loss per Share, as
calculated above, on all shares of the Security purchased or acquired during the Relevant Period.
If the Recognized Loss calculates to a negative number (i.e., a gain), then the Recognized Loss
will be $0.00. The Recognized Loss may be adjusted according to the steps that follow.
Market Loss Limitation: If a Preliminary Claimant’s actual market loss on shares of the
Security purchased/acquired during the Relevant Period is less than his, her or its Recognized
Loss, then his, her or its Recognized Loss shall be limited to the actual market loss amount. If
the actual market loss calculates to a gain, then the Preliminary Claimant’s Recognized Loss will
be $0.00.
The actual market loss will be calculated as (a) the total purchase amount for shares of
the Security purchased/acquired during the Relevant Period, 3 less the sum of (b) the sales
proceeds from shares of the Security purchased/acquired during the Relevant Period and sold
during the Relevant Period or during the Lookback Period,4 and (c) the holding value on the
remaining of those shares purchased during the Relevant Period, which for the purposes of this
calculation will be $25.98 per share, the moving average price as of the last day of the Lookback
Period, as shown on the last row in Table B.5
Eligible Claimant: A Preliminary Claimant, who is not an Excluded Party, who submitted
a valid Claim Form, and has suffered a Recognized Loss, as calculated above, will be deemed an
Eligible Claimant.
Allocation of Funds: If the Net Available Fair Fund is equal to or exceeds the sum of
Recognized Losses of all Eligible Claimants, each Eligible Claimant’s distribution amount will
equal his, her, or its Recognized Loss, plus any “Reasonable Interest” awarded. If the Net
Available Fair Fund is less than the sum of the Recognized Losses of all Eligible Claimants, each
Eligible Claimant’s distribution amount will equal his, her or its “Pro Rata Percentage” of the
3

Purchases during the Relevant Period to cover short positions will be included in the calculation of actual market
loss if the purchase is matched to a short sale during the Relevant Period. Purchases/acquisitions that are not eligible
for recovery will not be considered for purposes of calculating the actual market loss.
4
Sales of the Security during the Relevant Period will be matched first against the opening position and the
proceeds of such sales will not be considered for purposes of calculating the actual market loss. Short sales will be
considered for purposes of calculating the actual market loss.
5
Any open short positions at the end of the Lookback Period will be ignored for purposes of calculating the actual
market loss.

3

Net Available Fair Fund. In either case, the distribution amount will be subject to the “Offset for
Prior Recovery” and “Minimum Distribution Amount.”
Pro Rata Percentage: This computation is intended to measure Eligible Claimants’
Recognized Losses against one another. An Eligible Claimant’s Pro Rata Percentage will be
calculated as the ratio of his, her or its Recognized Loss to the sum of Recognized Losses of all
Eligible Claimants.
Prior Recovery: To avoid payment of a windfall, an Eligible Claimant’s distribution
amount will be no larger than his, her or its Recognized Loss minus the amount of any
compensation for the loss that resulted from the conduct described in the Order that was received
from another source (e.g., class action settlement), to the extent known by the Fund
Administrator (“Prior Recovery”), plus any Reasonable Interest awarded. That is, the
distribution amount will be capped at the Recognized Loss less the Prior Recovery, plus any
Reasonable Interest awarded.
Reasonable Interest: If the Net Available Fair Fund exceeds the amount necessary to pay
all Eligible Claimants their Recognized Loss (minus any Prior Recovery) in full, the Fund
Administrator, in consultation with the Commission staff, may include interest in the distribution
amount to compensate for the time value of money. Reasonable Interest will be calculated using
the Short-term Applicable Federal Rate plus three percent (3%), compounded quarterly from the
end of the Relevant Period through the approximate date of the disbursement of the funds. If
there are insufficient funds to pay Reasonable Interest in full to all Eligible Claimants,
Reasonable Interest will be awarded on a pro-rata basis from the excess funds.
Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00. An
Eligible Claimant whose distribution amount is less than the Minimum Distribution Amount will
be deemed ineligible and his, her or its distribution amount may be reallocated on a pro-rata
basis to Eligible Claimants whose distribution amounts are greater than or equal to the Minimum
Distribution Amount.
Payee: An Eligible Claimant whose distribution amount equals or exceeds the Minimum
Distribution Amount will be deemed a Payee.
Distribution Payment: Each Payee will receive a Distribution Payment equal to his, her,
or its calculated distribution amount.

4

Table A: Health Insurance Innovations Common Stock Inflation Schedule
Date Range
March 2, 2017 through November 1, 2018
November 2, 2018 through November 4, 2018
November 5, 2018 through March 12, 2019
On or after March 13, 2019

Inflation per Share
$19.06
$14.64
$7.56
$0.00

Table B: Health Insurance Innovations Common Stock Moving Average Closing Price
during the Lookback Period

Date
3/13/2019
3/14/2019
3/15/2019
3/18/2019
3/19/2019
3/20/2019
3/21/2019
3/22/2019
3/25/2019
3/26/2019
3/27/2019
3/28/2019
3/29/2019
4/1/2019
4/2/2019
4/3/2019
4/4/2019
4/5/2019
4/8/2019
4/9/2019
4/10/2019

Moving
Average
Closing Price
from March
13, 2019 to
Date Shown
$31.77
$32.65
$33.16
$33.17
$33.05
$32.62
$32.43
$32.04
$31.78
$31.34
$31.03
$30.75
$30.45
$30.13
$29.82
$29.58
$29.42
$29.31
$29.19
$29.03
$28.93

Moving
Average
Closing Price
from March
13, 2019 to
Date Shown
$28.79
$28.57
$28.36
$28.19
$28.03
$27.87
$27.76
$27.71
$27.61
$27.51
$27.44
$27.38
$27.26
$27.10
$26.95
$26.86
$26.84
$26.71
$26.59
$26.45
$26.31

Date
4/11/2019
4/12/2019
4/15/2019
4/16/2019
4/17/2019
4/18/2019
4/22/2019
4/23/2019
4/24/2019
4/25/2019
4/26/2019
4/29/2019
4/30/2019
5/1/2019
5/2/2019
5/3/2019
5/6/2019
5/7/2019
5/8/2019
5/9/2019
5/10/2019

5

Date
5/13/2019
5/14/2019
5/15/2019
5/16/2019
5/17/2019
5/20/2019
5/21/2019
5/22/2019
5/23/2019
5/24/2019
5/28/2019
5/29/2019
5/30/2019
5/31/2019
6/3/2019
6/4/2019
6/5/2019
6/6/2019
6/7/2019
6/10/2019

Moving
Average
Closing Price
from March
13, 2019 to
Date Shown
$26.13
$26.02
$25.97
$25.93
$25.88
$25.86
$25.86
$25.85
$25.83
$25.81
$25.76
$25.71
$25.67
$25.67
$25.69
$25.74
$25.79
$25.84
$25.91
$25.98

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3A80198c54962f4069. Public record. Not legal advice.