Yost sues software company over $75.9M in losses to state pension funds

COLUMBUS — Attorney General Dave Yost has filed a motion asking that Ohio be named lead plaintiff in a securities class-action lawsuit claiming that ZoomInfo Technologies Inc. deliberately misled investors, fueling $75.9 million in losses for the Ohio Public Employees Retirement System and the State Teachers Retirement System.
 
“ZoomInfo’s leadership willfully blinded investors to the reality that interest in the company’s product was waning,” Yost said. “Their reckless deception inflicted serious losses for Ohio’s pension systems and other investors, and we’re demanding accountability.”
 
The lawsuit, recently filed in the U.S. District Court for the Western District of Washington, accuses the software and data company of committing securities fraud from November 2020 to August 2024 by concealing a slowing demand for its product after a temporary revenue boost early in the COVID-19 pandemic.
 
ZoomInfo, headquartered in Vancouver, Washington, provides its business clients with contact information for potential customers through subscription-based software. According to the lawsuit, the company engaged in deceptive tactics to inflate the value of its stock while falsely crediting its growth to the strength of its product.
 
As part of the scheme, ZoomInfo made aggressive efforts to prevent subscribers from canceling, using coercive auto-renewal policies and threats of legal action to keep clients under contract, the lawsuit says. Meanwhile, the company sought to bolster its subscriber count by extending credit to droves of new, high-risk small-business clients, many of whom ultimately defaulted on their contracts.
 
The fraud came to light when the company released a series of disappointing financial reports detailing the scope of contract cancellations and write-offs of uncollected debt. Following the revelation, the company’s stock dropped roughly 80%, causing billions of dollars in losses to shareholders.
 
The lawsuit seeks damages for the financial losses caused by the company’s wrongdoing. Also named as defendants are CEO Henry Schuck, former CFO Cameron Hyzer, and controlling shareholders TA Associates, The Carlyle Group, and DO Holdings (WA).