A Zillow shareholder has filed a derivative lawsuit against CEO Jeremy Wacksman and other current and former company officers and directors, alleging they failed to adequately disclose antitrust risks tied to Zillow’s 2025 Redfin rentals agreement and that certain insiders sold more than $81 million in company stock before those risks became public.
The Sept. 9 complaint, filed in King County Superior Court in Washington, accuses the defendants of “breaches of fiduciary duties, unjust enrichment and waste of corporate assets.” The suit was filed derivatively on behalf of Zillow, meaning the shareholder is seeking to recover for alleged harm to the company itself.
Among the complaint’s most significant allegations is that Wacksman and seven other Zillow executives and directors sold more than $81 million in personally held Zillow stock while allegedly possessing material nonpublic information about the Redfin agreement and the antitrust risks surrounding it.
The complaint alleges that between February 2025 and the time that the FTC action became public that September, Wacksman sold 118,968 shares for about $7.2 million, Zillow co-founder Richard Barton sold 350,000 shares for about $29.8 million, co-founder Lloyd Frink sold more than 433,000 shares for roughly $33.9 million, and Chief Financial Officer and Chief Operating Officer Jeremy Hofmann sold about $7.4 million in stock.
The lawsuit characterizes the timing of the sales as suspicious and alleges the defendants knew details of the Redfin agreement and its potential antitrust exposure before that information was available to investors. Those claims have not been proven, and the filing does not establish that the stock sales violated securities laws.
The lawsuit is the latest legal scrutiny surrounding Zillow and Redfin’s February 2025 rental listings agreement, under which Zillow paid Redfin $100 million as the companies entered into a multifamily rental syndication partnership.
Federal and state regulators later alleged the deal went further than a standard syndication agreement by effectively removing Redfin as an independent competitor in the multifamily rental advertising market. The Federal Trade Commission alleged Redfin agreed to wind down its own multifamily advertising business, transition customers to Zillow and stay out of the market for as long as nine years.
In February, a federal magistrate judge ordered Zillow and Redfin to turn over additional documents and communications, including exchanges between Wacksman and former Redfin CEO Glenn Kelman, as well as communications between Wacksman and Zillow’s board.
The FTC and attorneys general from Arizona, Connecticut, New York, Virginia and Washington reached a proposed resolution with Zillow and Redfin on Aug. 24, shortly before the antitrust case was scheduled to go to trial.
Although it was filed more than two weeks after Zillow, Redfin and regulators announced a proposed resolution of the antitrust case, the Sept. 9 derivative complaint does not address that development and still states that the case “is set to begin” trial on Aug. 24.
Under the proposed stipulated order, the companies’ rental syndication partnership would continue, but Redfin would also be required to reenter the internet listing services market as an independent competitor, build its own technology infrastructure and sales operation, and launch its own standalone multifamily advertising product. Zillow would be required to waive certain restrictions that could impede Redfin’s hiring efforts and allow some customers to renegotiate contracts following Redfin’s relaunch.
Zillow characterized the resolution at the time as allowing the partnership to continue and maintained that the arrangement was “pro-consumer and procompetitive.” The FTC, meanwhile, described the order as unwinding a key term of what it alleged was an unlawful agreement.
The newer Sept. 9 derivative complaint argues that the Redfin deal and the litigation that followed caused Zillow financial and reputational harm. It also points to the existing Breidert v. Zillow Group federal securities class action against Zillow, Wacksman and Hofmann, which raises related claims stemming from the Redfin agreement and the company’s disclosures to investors.
The plaintiff, Shauna L. Binette Roth IRA, says it has held Zillow stock continuously since at least September 2019. The complaint names Zillow itself as a nominal defendant and says the shareholder did not first demand that Zillow’s board pursue the claims because doing so would have been futile, arguing that the directors themselves face potential liability over the alleged conduct.
In a statement shared with Inman, a Zillow spokesperson reiterated the company’s earlier “procompetitive” and “pro-consumer” framing around the Redfin rental listings partnership and said the proposed FTC resolution helps put the dispute behind the company.
“The resolution we recently reached with the FTC is a win for renters and multifamily housing providers. It enables us to keep our energy focused on innovating for renters and property managers, and ultimately making renting easier, more affordable and better for everyone.”
