Realty Firm Reeling From ‘Rape Culture’ Case DExiting to Texas

EXp World Holdings Inc., which lost a landmark Delaware court ruling over its alleged “rape culture,” said Tuesday that its shareholders had voted to recharter the real estate firm in Texas.

The company issued a regulatory filing disclosing the outcome of its May 8 annual meeting, including the “DExit” proposal, which garnered roughly 80 million shares voted in favor, 36.5 million against, and about 25 million combined abstentions and broker non-votes. About half of the votes to relocate came from non-insiders, according to the Form 8-K filed with the Securities and Exchange Commission. The results are preliminary and subject to change, the filing said.

The announcement comes nearly four months after a Delaware Chancery Court judge ordered eXp founder Glenn Sanford to face a shareholder lawsuit that alleges he actively covered up rapes and sexual assaults committed by two superstar agents because the company’s pyramid-style pay structure placed them in his revenue downline. The decision also let lack-of-oversight claims move forward against other board members who allegedly turned a blind eye even after a whistleblower emerged.

The legal setback reflected the widening fallout of accusations made in civil lawsuits against David Golden and Michael Bjorkman, two real estate “influencers” who allegedly drugged women at boozy recruiting events, assaulted them in hotel rooms, and blackmailed them into joining eXp. The company—known for a work-hard, play-hard culture that revolves around “alpha agents”—has been hit with a string of civil suits asserting related sex-trafficking claims.

The real estate firm is far from the first business to leave Delaware under a litigation cloud. But its reincorporation plan raised eyebrows thanks to the extreme nature of the alleged misconduct, which leaves little doubt eXp’s leaders were driven by Delaware’s robust accountability standards to seek a jurisdiction with a more laissez-faire reputation.

Texas, which recently set up a new business court, is making an aggressive play to attract companies by touting rules that make it harder for shareholders to sue corporate boards and executives. The series of high-profile departures began after a $56 billion court ruling against Elon Musk pushed the billionaire to recharter Tesla Inc. in Texas, where it was already headquartered.

Although the size of the DExit wave is fiercely debated, several other major tech firms have followed Tesla’s lead, including Coinbase Global Inc. and—pending an investor vote—Dell Technologies Inc. Other companies including TripAdvisor Inc. and Dropbox Inc. have moved to Nevada, which also offers greater legal protections for boards and managers.