A judge has given preliminary approval to a $15 million settlement from Zillow Group to shareholders who sued the firm over a previously undisclosed federal probe into its co-marketing program between lenders and real estate agents.
The lawsuit from investors, filed in 2018, accuses the real estate listing platform of Securities and Exchange Commission violations in artificially inflating its stock by failing to reveal the severity of a Consumer Financial Protection Bureau investigation into its practices. The regulator
Under the settlement, Zillow admits no wrongdoing and denies the allegations. U.S. District Judge John C. Coughenour signed the order Monday, and the settlement is due to be finalized in an Aug. 3 hearing in the U.S. District Court for the Western District of Washington, according to court documents.
A spokesperson for Zillow this week said the company is pleased the parties have reached a resolution, and didn't comment further. Counsel for the three class representatives for the class of plaintiffs didn't respond to requests for comment.
The CFPB ended its inquiry into Zillow's Premier Agent program in 2018. The program, Zillow's main revenue driver, allows real estate agents to invite up to five lenders to share marketing costs for advertising. Shareholders in an amended complaint claimed Zillow, amidst the probe, had falsely reassured investors that the program
In August 2017, Zillow
The case was slated to go to trial this July, although the sides had announced they had reached a settlement last October before filing the proposed agreement last week. Attorneys for the plaintiffs have asked the court to award them fees up to $5 million, or a third of the settlement amount, and reimbursement of litigation expenses up to $1.5 million, according to court filings.
Up to $1.5 million may also be withdrawn from the amount for the administrative costs of carrying out the settlement. The three class representatives, identified only as shareholders in the complaint, are due to receive amounts up to $15,000 each, or $45,000 combined.
Shareholders who purchased and sold Zillow stock during the identified period through Aug. 8, 2017 don't have a recognized loss per the settlement. Class members must submit their proof of claim by July 11.
The Premier Agent program made up 66%, or $1.3 billion of Zillow's $2 billion in revenue in 2022, according to the company's annual earnings report
The company also operates a home loan division, Zillow Home Loans, which saw its total origination volumes fall 62% last year to $1.5 billion. Zillow also completed the