Realogy Holdings Corp. (RLGY) Accused of Misleading Investors
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between February 24, 2017 and May 22, 2019, since February 2017, Realogy Holdings Corp. (RLGY) made a series of statements touting its ability to remain competitive amongst sales agents with a graduated commission model despite the competitive nature of the real estate brokerage industry. These statements also emphasized the importance of compliance with industry regulations and acknowledged that failure to comply could have adverse effects on the company. However, Realogy’s misleading statements failed to disclose that it was actually in violation of industry regulations by engaging in anticompetitive behavior that required property sellers to pay the commissions of buyer’s brokers at an inflated rate. The truth of Realogy and other realtors’ business practices was revealed in a series of articles from March to April 2019, resulting in Realogy’s stock price falling 6.1%. Then, on May 22, 2019, it became public information that the U.S. Department of Justice had opened an investigation on the antitrust practices of the real estate industry and identified Realogy as one of the companies under investigation. On this news, the stock price fell $0.71, over 9% to close at $7.13. Today the stock is trading at $5.53.