Three funds managed by Harbor Capital have filed a lawsuit against ZoomInfo Technologies, accusing the sales-intelligence firm and three senior executives of orchestrating a billion-dollar stock selloff while propping up a key financial metric. The complaint, lodged on October 30 in the U.S. District Court for the Western District of Washington, alleges that the company's leadership misled investors about the health of its subscription business, enabling them to unload more than $1.2 billion in personal holdings before the truth came to light.
The plaintiffs—Harbor Capital Appreciation Fund, Harbor Capital Appreciation CIT, and Harbor Capital Group Trust for Defined Benefit Plans—say they purchased ZoomInfo shares based on public disclosures, relying on the advice of their subadvisor, Jennison Associates. At the center of the case is the company's reported remaining performance obligations (RPO), a metric that analysts viewed as a barometer of customer retention and contract strength. According to the filing, that barometer was systematically distorted.
The complaint describes a "fraudulent scheme" built on four pillars: selling subscriptions to virtually anyone without credit checks, failing to account for customers unlikely to pay, keeping delinquent accounts on the books for up to 360 days instead of writing them off, and using coercive automatic renewals once genuine demand began to cool. The filing quotes former employees who describe a sales culture devoid of credit vetting. One former manager reportedly said the philosophy was "get it done, we'll deal with [any problems] later," while another likened the sales floor to a "boiler-room" environment where underperformers' names were displayed on office televisions.
The alleged tactics extended to renewal practices. Account managers were reportedly instructed to wait until one day before the 60-day opt-out deadline to contact customers, effectively trapping them into another year of service. One former employee called the policy "entrapment," and another said the company designed renewal opt-out emails to be caught by spam filters. A former revenue operations team member said employees "felt like they were a collections agency."
Meanwhile, the complaint alleges that top executives were selling shares at an extraordinary pace. The CEO allegedly sold 21,617,859 shares for approximately $1.1 billion, the then-CFO sold 609,343 shares for over $35 million, and the then-president and COO sold more than 1,154,296 shares for nearly $66 million. Many of these sales, the filing says, fell outside pre-arranged Rule 10b5-1 trading plans, and the plans themselves were allegedly adopted after executives already possessed material nonpublic information about ZoomInfo's shaky financial foundation.
The truth emerged in stages between November 2022 and August 2024, with each partial disclosure triggering significant stock drops. The largest came on August 5, 2024, when ZoomInfo announced a $33 million bad-debt charge tied to customer non-payment, cut its revenue guidance by approximately $65 million, and announced the CFO's departure. The CEO later admitted at an investor conference that the company "extended credit historically to customers who weren't creditworthy." By that point, ZoomInfo's stock had fallen from a high of $77.35 to $8 per share—a decline of roughly 90%.
The complaint also references a related class action, State Teachers Retirement System of Ohio v. ZoomInfo Technologies, Inc. (No. 3:24-cv-05739-TMC), in which the same court in October 2025 denied in part the defendants' motion to dismiss, finding that substantially similar allegations had been adequately pled. The Harbor funds bring five causes of action under the Securities Exchange Act and common law, seeking compensatory and punitive damages.
This case adds to a growing list of regulatory and legal actions targeting alleged financial misconduct. For instance, the SEC's recent action against Linqto highlights similar concerns about inflated valuations, while Netcapital faces a class action over alleged revenue inflation. Advisors should note the importance of scrutinizing disclosed metrics and the risks of relying on company-provided figures.
