Realogy snaps back at Compass, denies seeking a sale

SoftBank-backed brokerage said Friday that it had spurned Realogy’s offer

National /
Sep.September 09, 2019 06:32 AM
Compass CEO Robert Reffkin and Realogy CEO Ryan Schneider (Credit: Columbia and iStock)

Compass CEO Robert Reffkin and Realogy CEO Ryan Schneider (Credit: Columbia and iStock)

Realogy isn’t wasting any time trying to set the record straight.

In an email to employees and agents on Saturday, CEO Ryan Schneider flatly denied trying to sell the company to Compass — an assertion he said was “designed to inspire sensational news coverage about Realogy that is simply not true.”

“We want to be clear with you that we have never had discussions to sell or merge Realogy with Compass,” read the letter, a copy of which was filed Monday with the U.S. Securities and Exchange Commission before the market opened. “The reality is that Compass is trying to distract the media and the industry from the core issue of its illegal and unfair business practices, which are part of our lawsuit against them.”

Realogy’s July lawsuit accused Compass of “predatory” poaching and attempts at price-fixing.

The suit also claimed Compass routinely offers agents “grossly inflated compensation packages” and arranges workarounds to employees’ non-competes.

Late Friday, Compass filed a motion to dismiss Realogy’s lawsuit, which it claimed was “an act of desperation” to address the New Jersey-based conglomerate’s “rapidly eroding market share and a plummeting stock price.”

In a statement, the SoftBank-backed firm alleged that Schneider attempted to broker the sale of Realogy to Compass — an offer Compass said it turned down. The statement said if the case isn’t dismissed, Compass intends to file counterclaims based on a meeting arranged by Schneider, in which he discussed “the kind of premium” he thought Realogy’s board would want.

The audacity of Compass’ statement on Friday prompted Realogy’s unusual decision to comment publicly on pending litigation.

“We stand by the allegations in our complaint,” Schneider wrote. “I ask that you not allow Compass’s misleading and intentionally provocative statements to distract you.”

Schneider’s letter also referenced a second lawsuit in which Realogy said a former finance executive violated his non-compete by accepting a job at Compass; the suit claims Compass acted improperly by accepting confidential information from the employee.

Last month, a New Jersey judge ruled that Compass was complicit in violating the non-compete and created a “dummy job” to circumvent the restrictions.  Compass has said it specifically instructs new hires not to bring confidential information, and makes new agents sign Silicon Valley-grade contracts not to bring intellectual property from their prior companies.


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