A shareholder in Zillow Group Inc. has filed a class action against the company alleging that the company should have told investors about its practices, which recently led to an investigation by the Consumer Financial Protection Bureau (“CFPB”).
When Zillow announced that it received a Notice from the CFPB on August 8, 2017, alleging violations of the Real Estate Settlement Procedures Act, shares of the company fell $7.43, down more than 15 percent, over the next two trading days.
That CFPB investigation is ongoing and is related to the company’s co-marketing program, which began in June 2013 and allows agents and mortgage lenders, who pay the company separately, to advertise next to each other on Zillow’s website and app. The investor claims that Zillow’s Security and Exchange Commission filings, which assured investors that its content endeavors to be consistent with laws and regulations, were misleading. The complaint accuses Zillow, its CEO, and its CFO, of violating several sections of the Security Exchange Act of 1934.
The complaint seeks to certify a class of investors who bought shares of the company between February 2016 and August 8, 2017. It estimates that the class would have hundreds of thousands of members and seeks unspecified damages.
The case is Vargosko v. Zillow Group Inc., et al, case number 2:17-cv-06207, in the U.S. District Court for the Central District of California.