Investor Class Action Filed Against Zeta Global Holdings (ZETA) for Securities Fraud Violations

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Dec 52024

Case Background: The Class Period begins on February 27, 2024. On that day, Zeta issued a press release announcing its financial results for the fiscal year and quarter ended December 31, 2023 and touted the company’s “Fourth Consecutive Year of 20%+ Revenue Growth in 2023.” Likewise, on February 28, 2024, Zeta submitted its annual report for the fiscal year ended December 31, 2023 on a Form 10-K filed with the SEC. In the annual report, Zeta affirmed the company’s previously reported financial results and touted that the company has “the industry’s largest opted-in data set for omnichannel marketing,” allegedly composed of “more than 240 million opted-in individuals in the U.S. and more than 535 million opted-in individuals globally.” Then, the market was shocked on November 13, 2024, when Culper Research published a report on Zeta alleging that the “integrity of the Company’s data collection and reported financials” is severely undermined by two factors. First, the report alleged that “Zeta has formed ‘two-way’ contracts with third party consent farms wherein the Company simultaneously acts as both a supplier and a buyer of consumer data,” allowing Zeta to “flatter reported revenue growth” and indicating possible “round-tripping” of revenue. Second, the report alleged that Zeta collects the majority of its customer data from a network of “sham websites that hoodwink millions of consumers each month into handing their data over to Zeta under false pretenses.” For example, the report alleged that Zeta and its subsidiaries operate a number of fake job boards which are designed to trick individuals into submitting personal data under the pretense of job applications. The report further alleged that Zeta’s “most valuable data” comes from these predatory websites, dubbed consent farms, which are “responsible for almost the entirety of the Company’s growth.” On this news, Zeta’s stock price fell $10.46, or 37.07%, to close at $17.76 per share on November 13, 2024. The complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) Zeta used two-way contracts to artificially inflate financial results; (2) Zeta engaged in round trip transactions to artificially inflate financial results; (3) Zeta utilized predatory consent farms to collect user data; (4) these consent farms have driven almost the entirety of Zeta’s growth; and (5) as a result of the foregoing, Defendants’ positive statements about the company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. What is a Lead Plaintiff? A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.