Davoodi v. Zeta Global Holdings Corp

On February 27, 2025, Labaton Keller Sucharow was appointed Co-Lead Counsel in a securities litigation case against Zeta Global Holdings Corp. (Zeta or the Company) and executive officers David A. Steinberg and Christopher Greiner (collectively, Defendants).  The lawsuit alleges violations under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act), U.S. Securities and Exchange Commission (SEC) Rule 10b-5, on behalf of persons and entities that purchased or otherwise acquired Zeta securities between February 27, 2024, and November 13, 2024, inclusive (the Class Period).

Zeta is a marketing technology company that operates a cloud-based platform for marketers to identify and target potential consumers across a wide range of digital channels.  The Company purports to “offer one of the largest proprietary data sets in the U.S.” composed of “an amalgamation of [] private proprietary data, publicly available data and data provided by [a] partner ecosystem.”  

During the Class Period, the Company touted its year-on-year revenue growth and claimed to have “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.”  

On November 13, 2024, market research group Culper Research published a report entitled “Zeta Global Holdings Corp (ZETA): Shams, Scams, and Spam” (the Culper Report) alleging that the “integrity of the Company’s data collection and reported financials” is severely undermined by two factors.  First, the Culper 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 the Company to “flatter reported revenue growth” and indicating possible “roundtripping” of revenue.  Second, the Culper Report alleged that Zeta’s 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.”  On this news, the Company’s stock price fell $10.46, or 37.07%, to close at $17.76 per share on November 13, 2024, on unusually heavy trading volume.

On November 22, 2024, a complaint was filed alleging 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 (1) that Zeta used two-way contracts to artificially inflate financial results; (2) that Zeta engaged in round trip transactions to artificially inflate financial results; (3) that Zeta utilized predatory consent farms to collect user data; (4) that these consent farms have driven almost the entirety of Zeta’s growth; and (5) that, 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.

The case is Davoodi v. Zeta Global Holdings Corp., No. 24-8961 (DEH) (S.D.N.Y.).  Labaton Keller Sucharow represents Co-Lead Plaintiff Allegheny County Employees’ Retirement System.

‍