Lawsuit Threatens Rocket's Acquisition of Redfin

A proposed acquisition of Redfin by Rocket Companies is facing new legal scrutiny following a lawsuit filed in Seattle District Court by Redfin stockholder Jason Morano.

According to a report from HousingWire, the suit names Rocket, Redfin, Redfin CEO Glenn Kelman, and several Redfin board members as defendants. Morano accuses the group of contract breaches, fraud, misrepresentation, misappropriation of trade secrets, and unjust enrichment.

The complaint centres on a proxy statement filed with the Securities and Exchange Commission, which Morano claims was misleading and incomplete. He argues that shareholders were not provided with key information needed to fairly evaluate the proposed acquisition.

Among the concerns raised is an alleged conflict of interest involving Goldman Sachs, which acted as Redfin’s financial advisor but also maintains a lending relationship with Rocket and holds equity in both companies. Morano argues this dual role was not adequately disclosed.

The complaint states:

In order to allow Redfin shareholders to contextualize the potential conflict posed by Goldman Sachs’ concurrent lending relationship with Rocket, the Proxy must disclose (i) the nature of the lending relationship between Goldman Sachs and Rocket, and (ii) the sums paid to Goldman by Rocket in connection with that relationship during the two years prior to March 9, 2025 (the date of Goldman Sachs’ fairness opinion to the Board in connection with the Proposed Merger). Currently, the Proxy discloses none of that information, and is therefore materially deficient.

In order to allow Redfin stockholders to cast fully informed votes with respect to the Proposed Merger, it is imperative that the Board cure the Disclosure Violations described above no later than five (5) days prior to the Stockholder Vote. If the Disclosure Violations are not cured, and the Proposed Merger is consummated, Plaintiff reserves the right to recover damages suffered by himself and similarly-situated investors as a result of such Disclosure Violations.

Rocket and Redfin announced a $1.75 billion deal in early March, with plans for a shareholder vote scheduled for June 4. At the time, the AIM Group described the move as a direct challenge to Zillow’s vision of a “super app” for real estate. The lawsuit, however, could complicate or delay the transaction.

Redfin endured massive losses in its recent Q1 2025 filing.

Meanwhile, Rocket has agreed to acquire the mortgage service provider Mr Cooper for a massive $9.4 billion.