For nearly six months, the ongoing debate over buyer broker compensation has loomed large over the real estate industry.
Two class-action lawsuits have emerged in that time accusing the National Association of Realtors and other multiple listing service providers of driving up seller costs by requiring a fee for the buyer’s broker, even though their role in the transaction is nominal.
Now, a third lawsuit has been filed that touches on the issue.
This time, it’s a class-action suit against Realogy for securities fraud, with the plaintiff alleging that Realogy investors purchased securities at inflated prices because of the brokerage’s failure to disclose the issues with this practice.
According to the suit filed Thursday by The Rosen Law Firm in the U.S. District Court of New Jersey, Realogy filed false and misleading statements with the Securities and Exchange Commission by not disclosing that it was engaging in “anticompetitive behavior by requiring property sellers to pay a buyer’s broker an inflated fee.”
The suit also names four Realogy execs as defendants, including former CEO Richard Smith, current CEO Ryan Schneider, former CFO Anthony Hull and current interim CFO Timothy Gustavson.
According to the suit, news coverage about Realogy’s practice of requiring a seller to pay the buyer’s broker a fee caused the company’s shares to tumble.
When the first class-action suit came to light in March, Realogy shares fell by 1.7%, the complaint states. When news of a second class-action hit in April, shares tumbled 4.4%. And, when word of a Department of Justice investigation into anti-trust violations hit in May, down they went again, falling another 9% to $7.13.
The suit goes on to allege that the defendants’ actions caused the plaintiff and others to “purchase and/or sell Realogy’s securities at artificially inflated and distorted prices.”
“Defendants engaged and participated in a continuous course of conduct to conceal adverse material information about the business, operations and future prospects of Realogy,” it continued.
HousingWire reached out to Realogy for comment but had not heard back as of press time. This article will be updated should we hear back.