DoubleVerify sued for allegedly not verifying its own claims

Shareholder Susana Kaszirer filed a derivative lawsuit on December 9, 2025, against DoubleVerify Holdings executives and directors in the Southern District of New York, alleging the company systematically misled investors about fundamental challenges threatening its core business model. The complaint targets CEO Mark Zagorski, CFO Nicola Allais, and eight board members for violations of securities laws and breach of fiduciary duties during a period spanning November 2023 through February 2025.

According to the 59-page complaint, DoubleVerify failed to disclose that customers were shifting advertising spending from open exchanges to closed platforms operated by Meta, Google, TikTok, and Amazon, where the company's technological capabilities faced severe limitations. The lawsuit alleges defendants knew the company's artificial intelligence-powered verification tools struggled to compete with native solutions provided by these walled garden platforms, undermining revenue projections and profit margins central to investor confidence.

The timing proves particularly damaging for the digital advertising verification company, which has faced mounting scrutiny following revelations that leading fraud detection systems routinely failed to block ads from being shown to automated traffic, even when bots identified themselves openly. Research firm Adalytics released findings on March 28, 2025, claiming DoubleVerify's verification services were ineffective and that customers were regularly billed for ad impressions served to declared bots operating out of known data center server farms.

Revenue model under pressure from platform consolidation

DoubleVerify generates revenue through two primary service categories detailed in the complaint. Measurement Services provide advertisers with analytics to verify that digital advertisements reach real people in fraud-free, brand-safe environments. These services operate through high volumes of low-value, automated transactions based on contractual terms with advertisers.

The company's Activation Services category represents a more lucrative offering. According to the lawsuit documents, "DoubleVerify's Activation Services are priced at a premium and generate substantially higher profit margins for DoubleVerify than its Measurement Services." These AI-powered tools help advertisers optimize campaign performance by filtering unsuitable content before purchasing ad inventory through programmatic demand-side platforms and social media channels.

The complaint alleges defendants concealed that "DoubleVerify's ability to monetize its Activation Services was limited due to the significant expense on the development of technology for closed platforms." The lawsuit further claims that integrating verification capabilities into closed platforms operated by major technology companies required substantially more resources and time than disclosed to investors, with certain platforms requiring several years before monetization could begin.

This dynamic created mounting pressure on profit margins as advertising dollars migrated toward environments where DoubleVerify faced direct competition from platform-native tools. According to the filing, "DoubleVerify's customers were shifting their ad spending from open exchanges to closed platforms, where the Company's technological capabilities were limited and competed directly with native tools provided by platforms like Meta Platforms and Amazon."

The shift accelerated as advertisers responded to proliferating bot traffic schemes enabled by improvements in generative AI technology. The complaint states that "prior to the Relevant Period, advertisers discovered a significant increase in ad impressions being displayed to robotic agents as opposed to real human consumers." Bad actors leveraged increasingly sophisticated automation to create seemingly authentic user agents capable of generating billions of fraudulent ad impressions.

Stock plunges amid disclosure of platform challenges

DoubleVerify's stock price suffered three major declines as the truth about these challenges emerged during 2024 and early 2025. Shares dropped 21.3 percent on February 29, 2024, after the company lowered first quarter revenue guidance due to "a slow start by brand advertisers and a slow ramp by recently signed new large customers." The stock fell from $39.24 to $30.89 following the announcement.

A second sharp decline occurred on May 8, 2024, when DoubleVerify cut its full-year revenue outlook due to customers reducing advertising spending. Shares plummeted 38.6 percent from $30.57 to $18.78 as analysts processed the implications of weakening demand for the company's premium-priced services.

The most devastating disclosure came on February 27, 2025, when DoubleVerify reported lower-than-expected fourth quarter sales and earnings. CEO Mark Zagorski acknowledged during the earnings call that "one of our largest customers facing billions of dollars of sharply escalating commodity costs, dramatically reduced its spend with DV as part of a sweeping cost reduction initiative." Zagorski further disclosed that "the shift of ad dollars from open web, programmatic to proprietary platforms like social, where most of our activation solutions were unavailable until early this year" had negatively impacted the company.

Shares collapsed 36 percent from $21.73 to $13.90 on February 28, 2025, erasing substantial shareholder value. Analysts at Truist Securities noted that DoubleVerify's revenue suffered from "more ad spend going towards private marketplace and programmatic guaranteed on proprietary platforms (i.e. walled-gardens, particularly social) at the expense of the open web." Goldman Sachs downgraded its rating and lowered the price target from $24 to $20, citing "a slower upsell environment from new customer wins."

Allegations of systematic overbilling for bot impressions

The derivative complaint includes particularly damaging allegations concerning the company's core fraud detection capabilities. According to the lawsuit, "DoubleVerify overbilled its customers for ad impressions served to declared bots operating out of known data center server farms" throughout the relevant period.

These allegations align with broader industry investigations revealing systematic failures in bot detection across digital advertising verification providers. Research analyzing more than a petabyte of web traffic data across two million websites over seven years found that at least 40 percent of web traffic consists of fake users or computerized bots, ranging from benign web crawlers to sophisticated fraud systems.

The complaint references both Wall Street Journal reporting and Adalytics research published on March 28, 2025, which claimed DoubleVerify "regularly missed detection of non-human traffic, contradicting the Company's claims that it helps brands avoid serving ads to non-human bot accounts." These revelations prompted U.S. Senator Mark Warner to contact the Federal Trade Commission and Department of Justice expressing concerns over allegations of systematic customer overcharging.

DoubleVerify's technology faced fundamental challenges distinguishing legitimate human traffic from increasingly sophisticated bot operations. The lawsuit alleges that "DoubleVerify's technology could not adequately discern real human user traffic from bot traffic, making the Company's Activation Services on open ad exchanges less useful to advertisers."

The World Federation of Advertisers estimates ad fraud will exceed $50 billion globally in 2025, making it second only to the drugs trade as a source of income for organized crime. This economic reality created strong incentives for advertisers to move spending toward closed platforms where access restrictions theoretically reduced fraud exposure, even as such migration undermined DoubleVerify's business model.

Misleading statements about competitive positioning

The derivative complaint catalogs extensive statements by CEO Zagorski and CFO Allais during investor conferences and earnings calls throughout 2024 that allegedly misrepresented the company's competitive position. During a November 14, 2023, conference, Zagorski stated that DoubleVerify would launch brand safety and suitability measurement on Meta's news feed "sometime in early 2024," describing it as providing "significant growth opportunities for us moving ahead."

At a December 4, 2023, conference, Zagorski characterized the company's Authentic Brand Suitability product as delivering 40 percent growth "on big numbers" for a five-year-old offering. He emphasized that "people who are using it today know it works" and described ABS as "a solution that I think is unparalleled in the industry." Zagorski noted the product commanded premium pricing at "almost 2.5 times more for that solution than we do for some of our measurement solutions."

During a January 17, 2024, conference, Zagorski claimed that "we have advertisers that work with our competitors for measurement are coming to us on performance tools, because our competitors don't have anything comparable." He further stated that "our relationship with walled gardens is very strong and will continue to grow," emphasizing the company's strategy to maintain presence across all platforms where advertising dollars flowed.

The complaint alleges these statements were materially false and misleading because defendants knew or recklessly disregarded that "DoubleVerify's competitors were better positioned to incorporate AI into their offerings on closed platforms, which impaired DoubleVerify's ability to compete effectively and adversely impacted the Company's profits."

Risk disclosures characterized existing problems as future possibilities

The derivative lawsuit takes particular aim at DoubleVerify's risk disclosures in Securities and Exchange Commission filings throughout the relevant period. The company's 2022 Form 10-K, referenced in subsequent quarterly reports, warned that failure "to respond to technological developments or evolving industry standards" could render the company's "solutions obsolete or less competitive."

Another risk factor stated that "some of our integration partners have developed products that compete with us and we cannot assure you that other partners will not also develop competing products in the future." The disclosure continued: "If our customers stopped using our solutions on these digital media platforms or if our integration partners decide to cease integrating our solutions, our business, financial condition and results of operations could be adversely affected."

According to the complaint, "DoubleVerify's risk disclosures were materially false and misleading because they characterized existing adverse facts as possibilities, when those facts had already begun to impact the Company." The lawsuit alleges defendants framed competitive pressures and technological limitations as hypothetical future risks rather than acknowledging these challenges were actively undermining the business during the disclosure period.

This pattern extended to proxy materials. The 2024 Proxy Statement filed on April 10, 2024, described the board's risk oversight responsibilities but allegedly failed to disclose material facts about customer migration to closed platforms, monetization limitations, competitor advantages in AI implementation, and systematic overbilling for bot impressions.

Insider stock sales during period of alleged fraud

The derivative complaint identifies three defendants who sold substantial amounts of DoubleVerify stock during the period when the company allegedly concealed material adverse information from investors. CFO Nicola Allais sold 193,248 shares for proceeds of approximately $5.36 million through transactions spanning November 2023 through February 2025.

Director Laura Desmond sold 518,225 shares for proceeds of approximately $16.07 million, with the largest single transaction involving 436,745 shares sold on November 15, 2023, for $13.84 million at $31.69 per share. Director Davis Noell executed the most substantial sales, disposing of 14,375,000 shares for total proceeds of approximately $435.2 million through transactions concentrated in November 2023.

The complaint alleges these "Insider Selling Defendants" violated the company's Insider Trading Compliance Policy, which prohibits trading while in possession of inside information. According to the lawsuit, the sales "were suspicious in timing and amount and were inconsistent with their pre- and post-Relevant period trading practices."

These transactions occurred as defendants allegedly knew material adverse facts about the company's business prospects that had not been disclosed to the investing public. When the truth emerged through a series of disclosures in 2024 and early 2025, the stock price collapsed, but only after the insider selling defendants had liquidated significant positions at substantially higher prices.

Multiple claims against executives and directors

The 59-page complaint asserts seven separate causes of action against various combinations of defendants. Count I alleges violations of Section 14(a) of the Securities Exchange Act based on material misstatements and omissions in the 2024 Proxy Statement. The lawsuit claims the proxy materials failed to disclose the shift to closed platforms, monetization limitations, systematic overbilling, and the resulting impact on business prospects.

Count II seeks contribution under Section 10(b) of the Exchange Act and Rule 10b-5 against the defendants named in a related securities fraud class action lawsuit filed by the Electrical Workers Pension Fund on May 22, 2025. This claim recognizes that DoubleVerify faces potential liability in the class action and seeks to allocate responsibility among the executives who allegedly caused the violations.

Counts III through VII assert state law claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and insider selling and misappropriation of information. These claims target the compensation received by executives during the period of alleged wrongdoing and the profits realized by insider selling defendants through stock sales at artificially inflated prices.

The complaint emphasizes that board members failed to implement adequate controls to oversee conduct risk relating to the company's core business and operations. Audit Committee members Rosie Perez, Gary Swidler, and Kelli Turner face particular scrutiny for allegedly failing to fulfill responsibilities under the Audit Committee Charter to review financial reporting, internal controls, and compliance with legal requirements.

Damages and corporate governance reforms sought

The derivative lawsuit seeks multiple forms of relief on behalf of DoubleVerify. Plaintiff Kaszirer requests that defendants be required to pay damages sustained by the company as a result of the alleged violations, including costs incurred for compensation and benefits paid to executives who violated securities laws, substantial loss of market capitalization, costs defending the pending securities fraud class action, and any fines or liability resulting from violations of federal law.

The complaint emphasizes reputational damage to the company, stating that "DoubleVerify's business, goodwill and reputation with its business partners, regulators and shareholders have been gravely impaired." The lawsuit notes that "for at least the foreseeable future, DoubleVerify will suffer from what is known as the 'liar's discount,' a term applied to the stocks of companies who have been implicated in illegal behavior and have misled the investing public."

Beyond monetary damages, the derivative action seeks corporate governance reforms designed to prevent future violations. These include proposals to strengthen board supervision of operations, develop procedures for greater shareholder input into board policies and guidelines, and ensure establishment of effective oversight of compliance with applicable laws, rules, and regulations.

The lawsuit also requests restitution from all defendants, contribution from the securities action defendants, and reimbursement of costs and expenses including reasonable attorneys' and experts' fees. Plaintiff Kaszirer demands a jury trial on all claims.

Demand futility based on substantial likelihood of liability

The derivative complaint devotes substantial attention to explaining why plaintiff did not make a pre-suit demand on the board to pursue these claims. Under Delaware law governing DoubleVerify's corporate structure, demand is excused when a majority of directors face a substantial likelihood of liability that would prevent them from impartially considering such a demand.

The lawsuit alleges that CEO Zagorski cannot impartially consider demand because his "principal professional occupation" is serving as the company's chief executive, making his "professional reputation inextricably bound to his role at DoubleVerify." The complaint notes Zagorski received $10.81 million in total compensation for fiscal 2023 and $1.08 million for fiscal 2024.

The three insider selling defendants face demand futility based on their stock sales during the relevant period. According to the complaint, these directors "directly benefitted from the wrongs and acts complained of herein and face a sufficiently substantial likelihood of liability in connection with their illicit insider stock sales" and therefore "cannot possibly consider a demand to sue themselves."

Audit Committee members face demand futility based on their alleged failure to fulfill charter responsibilities. The lawsuit emphasizes that these directors "were charged with ensuring that these reports did not contain such materially misleading information" yet allowed documents to be filed "with misleading information."

Implications for digital advertising verification market

The derivative lawsuit arrives as DoubleVerify has sought to expand its capabilities across closed platforms through new product launches. The company announced DV Authentic AdVantage on June 11, 2025, describing it as an AI-powered solution combining media quality verification with campaign optimization for walled garden advertising environments.

The company also expanded brand suitability measurement to Meta Threads feed on October 16, 2025, and launched content-level controls for Meta's Facebook and Instagram in February 2025. These product developments represent DoubleVerify's efforts to address the closed platform challenges at the center of the derivative lawsuit allegations.

However, these expansions occurred amid escalating concerns about AI-powered fraud schemes targeting digital advertisers. DoubleVerify itself disclosed on September 25, 2025, findings about a substantial increase in malicious mobile applications employing artificial intelligence to execute sophisticated ad fraud, demonstrating the evolving threat landscape that verification providers must address.

The company's 2025 Global Insights: North America Report released on July 22, 2025, documented a 101 percent increase in bot fraud alongside an 86 percent rise in General Invalid Traffic, underscoring the scale of challenges facing the verification industry. While North America achieved improvements in brand suitability violation rates, the acceleration of sophisticated bot schemes created mounting pressure on detection capabilities.

The derivative lawsuit raises fundamental questions about whether verification companies can effectively serve their core mission as advertising spending concentrates within closed platforms operated by the world's largest technology companies. Platform-native tools from Meta, Google, Amazon, and TikTok create direct competitive pressure on independent verification providers like DoubleVerify, particularly for premium-priced Activation Services that command substantially higher margins than basic measurement offerings.

These dynamics may reshape the digital advertising verification market as advertisers, platforms, and verification providers negotiate access to data necessary for effective fraud detection and brand safety monitoring. The lawsuit alleges that DoubleVerify executives misrepresented the company's ability to compete in this transformed environment, causing substantial damage to shareholder value when the truth emerged through a series of disclosures in 2024 and 2025.

Timeline

• November 10, 2023 - DoubleVerify reports Q3 2023 results, beginning of alleged fraud period
• November 14-15, 2023 - Director Davis Noell sells 14,375,000 shares for $435 million
• December 4, 2023 - CEO Zagorski touts Activation Services growth at investor conference
• January 17, 2024 - Zagorski claims competitors lack comparable performance tools
• February 28, 2024 - DoubleVerify lowers Q1 guidance; stock drops 21.3% to $30.89
• April 10, 2024 - Company files allegedly misleading 2024 Proxy Statement
• May 7, 2024 - Company cuts full-year outlook; stock plunges 38.6% to $18.78
• March 28, 2025 - Adalytics releases report alleging ineffective bot detection
• February 27, 2025 - DoubleVerify discloses platform shift impact; stock falls 36% to $13.90
• May 22, 2025 - Electrical Workers Pension Fund files securities class action lawsuit
• June 11, 2025 - Company announces DV Authentic AdVantage for walled gardens
• July 22, 2025 - DoubleVerify reports 101% increase in bot fraud in North America
• September 25, 2025 - Company discloses surge in AI-powered fraudulent mobile apps
• October 16, 2025 - DoubleVerify expands brand suitability tools to Meta Threads
• December 9, 2025 - Shareholder files derivative lawsuit in Southern District of New York

Summary

Who: Shareholder Susana Kaszirer filed a derivative lawsuit on behalf of DoubleVerify Holdings against CEO Mark Zagorski, CFO Nicola Allais, and eight board members including Davis Noell, Laura Desmond, Lucy Dobrin, Sundeep Jain, Rosie Perez, Gary Swidler, Kelli Turner, and Scott Wagner.

What: The complaint alleges violations of Sections 14(a), 10(b), and 20(a) of the Securities Exchange Act, breaches of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and insider selling and misappropriation of information. Specifically, defendants allegedly failed to disclose that customers were shifting spending to closed platforms where DoubleVerify's AI-powered tools faced severe limitations, that the company systematically overbilled customers for bot impressions, and that competitors were better positioned to incorporate AI into closed platform offerings.

When: The alleged fraud period spans November 10, 2023, through February 27, 2025, though the complaint notes wrongdoing continues as internal controls remain deficient. Stock price declines occurred on February 29, 2024 (21.3%), May 8, 2024 (38.6%), and February 28, 2025 (36%). The derivative lawsuit was filed on December 9, 2025.

Where: The lawsuit was filed in the United States District Court for the Southern District of New York as Case No. 1:25-cv-10200. DoubleVerify is incorporated in Delaware with principal executive offices at 462 Broadway, New York, New York. The company's common stock trades on the New York Stock Exchange under ticker symbol DV.

Why: The lawsuit seeks to recover damages suffered by DoubleVerify as a result of executive misconduct, including compensation paid to executives who violated securities laws, loss of market capitalization, costs defending the related class action lawsuit, and potential fines or liability. The complaint also seeks corporate governance reforms to prevent future violations and to address the "liar's discount" now affecting the company's stock price and ability to raise capital on favorable terms.