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

Zeta is a marketing technology company that operates a cloud-based platform—the Zeta Marketing Platform (ZMP)—for marketers to identify and target potential consumers across a wide range of digital channels, including email, social media, web, chat, connected TV, and video.  Central to Zeta's value proposition was its claim to own "the industry's largest opted-in data set for omnichannel marketing," which the Company described as composed of "more than 240 million opted-in individuals in the U.S. and more than 535 million opted-in individuals globally."

During the Class Period, Defendants repeatedly touted the size and quality of Zeta's "opted-in" data set as the Company's key competitive advantage and a critical pillar of the ZMP, linking it directly to Zeta's year-over-year revenue growth and its ability to attract large customers in highly regulated industries.  Numerous analyst reports issued "Buy" ratings premised in significant part on the purported size and opted-in nature of Zeta's data assets, with one analyst describing the data set as the Company's "secret sauce."  In reality, the vast majority of individuals in Zeta's data set had never provided "opted-in" consent as that term is commonly understood.  As alleged in the Amended Complaint filed on May 12, 2025, and supported by an independent investigation conducted by Lead Plaintiffs' data science expert, Zeta obtained a substantial portion of its user data through "consent farms"—sham websites that hoodwinked consumers into submitting personal information under false pretenses, such as fake job applications, stimulus money offers, or other rewards that did not exist.  In addition, Zeta collected data through "leaky form" behavior, acquiring user information before individuals actually submitted or consented, and data acquired through the Company's subsidiary Disqus was not collected under a true "opt-in" framework.  Former Zeta employees corroborated that the Company improperly managed user data, was intentionally opaque with customers about its opt-in practices, and loosened algorithmic restrictions to expand its pool of marketing targets.

The truth began to emerge through a series of four corrective disclosures.  First, on November 13, 2024, market research firm Culper Research published a report entitled "Zeta Global Holdings Corp (ZETA): Shams, Scams, and Spam" (the Culper Report), which detailed how Zeta operated a network of consent farms and collected data through deceptive methods.  On this news, Zeta's stock price fell $10.46, or 37.07%, to close at $17.76 per share on unusually heavy trading volume.  Defendants promptly and falsely denied the Culper Report, calling it "misleading" and "riddled with misrepresentations," and stating unequivocally that "we do not operate so-called 'consent farms.'"  Second, on December 9, 2024, at the Zeta Data Summit, Defendants admitted for the first time that only approximately 110 million of its purported 240+ million U.S. individuals had provided "opt-in email permission," causing the stock to decline an additional 12%.  Third, on February 26, 2025, Zeta filed its 2024 Form 10-K, which quietly removed all references to "opted-in" with respect to the Company's data set, causing the stock to drop further. Fourth, on March 10, 2025, The Capitol Forum published an article highlighting Zeta's removal of the "opted-in" language, and a Zeta spokesperson conceded that the language change was made "to provide shareholders with clear and accurate disclosures" and to "prevent misinterpretations"—effectively admitting that prior representations about "opted-in" users were neither clear nor accurate.  Zeta's stock price ultimately closed at $14.03 per share on March 10, 2025, down nearly 62% from its Class Period closing high of $36.74.

The Amended Complaint asserts three counts: Count I alleges violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) against all Defendants for materially false and misleading statements and omissions concerning Zeta's "opted-in" data set and denial of consent farm operations.  Count II alleges violations of Section 10(b) and Rule 10b-5(a) and (c) against Zeta and Defendant Steinberg, based on a scheme to defraud whereby Steinberg secretly sold approximately 13.4 million shares of Zeta common stock for profits exceeding $270 million through a complex web of trusts and LLCs designed to circumvent SEC reporting requirements, mandatory cooling-off periods, and Zeta's own insider trading compliance policy—all while publicly projecting bullish confidence in the Company.  Count III alleges violations of Section 20(a) of the Exchange Act against each of the Individual Defendants as controlling persons of Zeta.

On July 8, 2026, the U.S. District Court for the Southern District of New York denied Defendants' motion to dismiss in its entirety, sustaining all claims.  With respect to the material misrepresentation element, the Court held that Plaintiffs adequately alleged that Defendants' statements about Zeta's "opted-in" data set were misleading, concluding that (i) even crediting Defendants' argument that the 2024 Form 10-K revisions were merely a "clarification," (ii) the lack of definitional clarity in Defendants' prior statements about the nature of the data illustrated that the statements were "neither accurate nor complete," and (iii) at a minimum constituted actionable "half-truths" that omitted critical qualifying information.  The Court likewise found that Plaintiffs adequately pled that Zeta's categorical denials of operating consent farms constituted material misstatements, noting that the use of consent farms was material both to a reasonable shareholder's evaluation of the Company and to the regulatory risk incurred by Zeta's business model.  The Court rejected Defendants' arguments that short-seller reports should be disregarded, observing that Plaintiffs' own expert independently corroborated the Culper Report's findings.  On scienter, the Court found that Plaintiffs' allegations—including Defendants' (i) shifting responses to the Culper Report (initially denying it, then gradually acknowledging its substance), (ii) claimed ability to record, document, and validate every "opt-in" consent, and (iii) admission that they had not been transparent with the investment community—gave rise to a strong inference of conscious recklessness.  The Court further sustained Plaintiffs' claims for both transaction causation (under the fraud-on-the-market presumption) and loss causation (based on stock price declines coinciding with the corrective disclosures).  The Section 20(a) control person claims survived as to all Individual Defendants, and the scheme liability claim under Rule 10b-5(a) and (c) survived against Zeta and Defendant Steinberg, with the Court finding that Defendant Steinberg's use of purportedly independent affiliate entities to sell large quantities of shares while avoiding reporting requirements was sufficient to plead a deceptive act in furtherance of a scheme to defraud.

The case is In re Zeta Global Holdings Corporation Securities Litigation, No. 24-cv-8961 (DEH) (S.D.N.Y.).  Labaton Keller Sucharow represents Co-Lead Plaintiff Allegheny County Employees' Retirement System.