(The Center Square) – Ohio Attorney General Dave Yost wants to take the lead in a class action lawsuit against a company he says misled investors and cost two state retirement funds to lose more than $75 million.
ZoomInfo faces the suit recently filed in the U.S. District Court for the Western District of Washington, facing claims of securities fraud from November 2020 to August 2024 by concealing a slowing demand for its produce after a revenue boost early in the COVID-19 pandemic.
That, according to Yost, cost the Ohio Public Employees Retirement System and the State Teachers Retirement System $75.9 million.
“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.”
ZoomInfo, headquartered in Vancouver, Wash., provides 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.
Yost said the company aggressively tried to stop subscribers from canceling by using coercive auto-renewal policies and threats of legal action. At the same time, it tried to drive up the number of subscribers by giving credit to new, high-risk, small businesses who eventually defaulted on their contracts.
Yost said the activity 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 reports, the company’s stock dropped about 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 Chief Financial Officer Cameron Hyzer, and controlling shareholders TA Associates, The Carlyle Group, and DO Holdings.