A publicly-traded company under SEC investigation, DOJ grand jury subpoena and a looming reverse split. Surely these criteria lead any reasonable investor to think that such a company would be a sound investment, right? We didn’t think so either. Nevertheless, these facts didn’t stop LifeWallet’s stock price from surging more than 500% in a matter of days. Let’s take a closer look.

Originally trading as MSP Recovery, Inc but now doing business as “LifeWallet”, this company has quite the controversial history. Making its Nasdaq debut as a special purpose acquisition company in mid-2022, LifeWallet had an astonishing valuation of almost $33 billion. In its first seven days of trading, the stock would lose over 90% of its $10 share price and tens of billions of dollars in market capitalization. Since then, the company has endured many negative events which have caused the share price to decrease even further, to recent lows of just five cents ($0.05) per share.

• On August 1st, LifeWallet disclosed that the SEC opened an investigation into the company whereby the company was made to produce records pertaining to the $32 billion SPAC deal, among other matters. But it didn’t end there. LifeWallet was subsequently subpoenaed by the DOJ in connection with a grand jury investigation in the Southern District of Florida. Interestingly enough, the company waited almost a full year between being notified of the investigation until disclosing it to investors.
• One of LifeWallet’s largest clients, Cano Health, sued LifeWallet for $67 million in early August alleging that the company “is a sham and effectively a Ponzi scheme.” Cano goes on to accuse LifeWallet of using their inflated valuation to “support windfall salaries and perks for its executive officers, including many self-interested transactions with its own founder and CEO, Defendant John Ruiz.”
• On September 18th, LifeWallet disclosed that it will be effecting a reverse split in the amount of up to 1:300 shares. This was done in response to the company receiving a Nasdaq delisting notice stating that its share price had fallen too low to continue to be listed on the Nasdaq exchange. By effecting the reverse split, the company will be able to remain on the Nasdaq to the detriment of shareholders.
• As if to add insult to injury,  the company is out of operating cash and is currently sustaining a quarterly cash burn of -$12.3 million. It is worth noting that the company has never been profitable since inception.
• The stock price has risen for no apparent reason, meaning that there have been no press releases, SEC filings, or otherwise which would cause this stock to rise in the dramatic fashion that it has. 
• This, all while John Ruiz, LIFW’s CEO, is supposedly still living the high life. According to Miami Herald, Ruiz has bought 7 waterfront mansion and a Boeing private passenger jet.

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