A Redfin stockholder is ringing the alarm regarding the imminent closing of Rocket Companies’ $1.75 billion acquisition of the real estate brokerage, filing a suit that claims that certain information was not disclosed to investors.Plaintiff Jason Morano alleges that Redfin submitted “materially incomplete and misleading” filings with the Securities and Exchange Commission in order to persuade Redfin stockholders to approve the merger.The issue with the SEC filing, claims Morano, is that it is “materially deficient” because it does not explicitly outline the fact that Redfin’s financial advisor Goldman Sachs is also affiliated with Rocket Companies.

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The litigation filed in Seattle on May 9 names a number of defendants including Redfin, Rocket Companies and Glenn Kelman, the real estate brokerage’s CEO and accuses the parties of breaching their fiduciary duties of care and disclosure under Delaware Law.

The proxy filed with the SEC “vaguely discloses without any detail that Goldman Sachs Investment Banking has an existing relationship with Rocket,” the suit said, but “it is unclear the extent to which Goldman Sachs has received and continues to receive compensation from Rocket for lending services while simultaneously being compensated to serve as Redfin’s financial advisor.”Morano’s suit outlines that Goldman Sachs provided Rocket and other lenders with access to a $1.15 billion revolving credit facility dated July 2, 2024. At the end of last year, Rocket had no outstanding balance on the revolver, but was likely still required to pay commitment fees for undrawn amounts.

“To enable Redfin stockholders to contextualize the potential conflict posed by Goldman Sachs’ concurrent lending relationship with Rocket, the proxy must disclose the nature of the relationship (i.e., the Revolver), the amount committed by Goldman Sachs to Rocket under the Revolver, and the total aggregate amount paid by Rocket to Goldman Sachs under the Revolver (including interest and fees) during the two years prior to March 9, 2025,” the complaint reads.

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Additionally, the plaintiff points out that the proxy filing includes Goldman Sachs’ opinion outlining that the number of shares Redfin stockholders would get in the deal is fair from a financial standpoint. Morano’s suit questions whether that’s actually the case, pointing out that the filing “fails to disclose key inputs to a discounted cash flow analysis (“DCF Analysis”).”Goldman Sachs holds 2.51% of Redfin’s stock (3,208,427 shares) and 0.27% of Rocket’s stock (404,009 shares), litigation claims, though this too is not disclosed in the proxy filing, litigation reads.The plaintiff is asking for the Seattle federal court to postpone the Redfin shareholder vote, scheduled for June 4, 2025, unless and until the company disseminates supplemental information curing the alleged omissions in the proxy filing.

Rocket Companies and Redfin did not immediately respond to inquiries.If and when the merger is approved, it will be one of the most notable transactions to emerge in 2025.

The transaction is expected to add notable traffic to Rocket’s offerings and buoy its purchase originations. While Rocket has historically dominated the refinance market, its recent moves including this acquisition, are aimed at growing its business further.

The Detroit-based lender estimates the merger will generate more than $200 million in run-rate synergies by 2027. After fully integrating Redfin into its network, Rocket expects to generate over $60 million in revenue by combining its financing services with Redfin’s real estate business.