Zillow Pays $15m to Settle Investor Lawsuit from 2017

Zillow has agreed to a $15 million settlement to resolve a class action suit brought by its own shareholders all the way back in 2017.

The suit, which was consolidated from two separate suits in 2018, claims that the company's stock price fell in 2017 due to questions surrounding the legality of a program that enables real estate agents and lenders to share marketing expenses.

The disgruntled shareholders allege that because Zillow did not reveal that its co-marketing program was being investigated until two years after the investigation had begun, its share price was artificially inflated and that they lost money when the company's price fell as the investigation came to light.

The settlement is still subject to final approval, which is set for August 8th. If approved, it is expected to provide payments to shareholders who purchased Zillow shares from November the 17th, 2014, to August the 8th, 2017.

The Consumer Financial Protection Bureau had conducted a separate investigation into Zillow's agent-lender co-marketing program in 2018 but did not take action against the company.

Zillow has always maintained that the program is compliant with the Real Estate Settlement Procedures Act (RESPA) and did not admit any wrongdoing in settling the case. The settlement also resolves allegations that the former CEO (Spencer Rascoff) and former CFO (Kathleen Phillips) violated federal securities laws.

The $15 million paid out represents a tiny fraction of Zillow's bank balance with the company having recently posted a set of better-than-expected yearly results which saw it drastically reduce net losses.

As well as its ongoing legal spat with defunt, discount brokerage REX, Zillow is also fighting other shareholder suits relating to its failed iBuying business. Several suits have been lodged that allege that Zillow shareholders lost money as a result of the company's failure to adequately disclose the risks to its business associated with iBuying.