Former Anywhere Real Estate shareholders who exchanged shares for Compass stock are the proposed class in a lawsuit against Compass, Inc. alleging omissions in the merger’s regulatory disclosures.
Philippe Magloire filed the complaint Oct. 7 in the U.S. District Court for the Southern District of New York. It names Compass and 10 individuals as defendants and brings claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933.
Compass completed its acquisition of Anywhere on Jan. 9, with Anywhere surviving as a wholly owned subsidiary. The complaint says the exchange issued about 162.1 million new Compass shares. The proposed class excludes investors who bought Compass securities on the open market but did not take part in the exchange.
Magloire alleges the merger materials omitted information about regulatory review and Compass’s compliance with applicable laws. The complaint also alleges that Compass hired lawyer and lobbyist Mike Davis to seek access to senior U.S. Department of Justice officials. The allegations have not been established in court.
The complaint compares Compass’s $9.19 closing price on Oct. 7 with its $12.84 close on Jan. 9, when the acquisition closed, a decline of more than 28%. It cites the price comparison in support of its case but does not establish that the alleged omissions caused the decline.
Magloire seeks damages and other relief, including rescission of class members’ Compass share acquisitions in the merger exchange. The court has not ruled on those requests. The complaint says the claims rest on strict liability or negligence and expressly excludes allegations of fraud or scienter (intent to deceive).
Magloire’s counsel says motions seeking appointment as lead plaintiff are due Dec. 8. A lead plaintiff would represent the proposed class and direct the litigation. Robbins LLP lists Dec. 7 in a separate notice. The docket listing reviewed through Oct. 8 does not resolve the one-day difference.
