Ohio pensions named lead plaintiffs in $76 million fraud suit
By Marty Schladen
Ohio Capital Journal
A federal judge has tapped two Ohio pensions to lead a class-action suit by seven entities accusing the business-information platform ZoomInfo of making false statements about the health of the business. Later, truthful disclosures led to plunging stock values, costing public-pension systems and other investors tens of millions of dollars, the suit says.
Judge Tiffany M. Cartwright of the U.S. District Court of Western Washington last week named the Ohio pensions — the Ohio Public Employees Retirement System and the State Teachers Retirement System — lead plaintiffs in the case, Ohio Attorney General Dave Yost said in a statement. The two pension systems lost a combined $75.9 million due to what the suit calls ZoomInfo’s fraudulent statements, Yost said.
Vancouver, Wash.-based ZoomInfo offers clients a data platform with contact and business information about prospective customers. As the pandemic waned, the company misled its investors about the declining state of its business, the lawsuit alleges.
During the pandemic, it claimed that it was raking in record revenues, attracting billions in investments, the lawsuit said.
“The individual defendants, because of their positions of control and authority as officers and/or directors of the company, were able to, and did, control the content of the various SEC filings, press releases, and other public statements pertaining to the company during the class period,” the complaint said. “Each individual defendant was provided with copies of the documents alleged herein to be misleading before or shortly after their issuance, participated in conference calls with investors during which false and misleading statements were made, and/or had the ability and/or opportunity to prevent their issuance or cause them to be corrected. Accordingly, each individual defendant is responsible for the accuracy of the public statements detailed herein and is, therefore, primarily liable for the representations contained therein.”
By late 2022, it became impossible for ZoomInfo to hide the truth about the health of its business from the public, Judge Cartwright wrote in her order making the Ohio pensions the lead plaintiffs.
“Eventually, the truth about ZoomInfo’s financial status began to emerge,” she said. “ZoomInfo gradually revealed its customer retention and revenue in a series of five corrective disclosures between Nov. 1, 2022 and Aug. 5, 2024. On Nov. 1, ZoomInfo published a report disclosing losses and held a call with analysts in which (Chief Financial Officer Cameron) Hyzer revealed difficulties in the contract renewal process… Financial analysts ‘panned the report as inconsistent with the Company’s prior representations, . . . observing that the abrupt change in tone caught them ‘flat-footed’ given the Company and its management’s recent ‘bullish’ commentary.’ Following the Nov. 1 news, the price of ZoomInfo Class A common stock plunged.”
After those disclosures, the stock lost 90% of its value, going from $79 a share to just $8 a share, the suit said.
In announcing that the Ohio funds were joining the suit, Yost in a November statement said his aim was to protect Ohio retirees.
“ZoomInfo’s leadership willfully blinded investors to the reality that interest in the company’s product was waning,” he said. “Their reckless deception inflicted serious losses for Ohio’s pension systems and other investors, and we’re demanding accountability.”
* * *
••• Publisher's note: A free press is critical to having well-informed voters and citizens. While some news organizations opt for paid websites or costly paywalls, The Highland County Press has maintained a free newspaper and website for the last 25 years for our community. If you would like to contribute to this service, it would be greatly appreciated. Donations may be made to: The Highland County Press, P.O. Box 849, Hillsboro, Ohio 45133. Please include "for website" on the memo line.