NOTABLE CASES

With Incredible User Growth Due to COVID-19 Pandemic, Investors Allege Data Privacy & Security Issues Against Zoom

April 8, 2020

CASE SUMMARY

On March 22, 2019, Zoom filed a registration statement on Form S-1 with the SEC in connection with its initial public offering (“IPO”), which, after several amendments, was declared effective by the SEC on April 17, 2019.

On April 18, 2019, Zoom filed a prospectus on Form 424B4 with the SEC in connection with its IPO, which purported to provide information necessary for investors to consider before partaking in its IPO and purchasing the Company’s newly publicly-issued stock.

The Complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that:

  • (i) Zoom had inadequate data privacy and security measures;
  • (ii) contrary to Zoom’s assertions, the Company’s video communications service was not end-to-end encrypted;
  • (iii) as a result of all the foregoing, users of Zoom’s communications services were at an increased risk of having their personal information accessed by unauthorized parties, including Facebook;
  • (iv) usage of the Company’s video communications services was foreseeably likely to decline when the foregoing facts came to light; and
  • (v) as a result, the Company’s public statements were materially false and misleading at all relevant times

The truth about the deficiencies in Zoom’s software encryption began to come to light as early as July 2019. However, due in large part to the Company’s obfuscation, it was not until the COVID-19 pandemic in March and April of 2020, with businesses and other organizations increasingly relying on Zoom’s video communication software to facilitate remote work activity as governments increasingly implemented shelter-in-place orders, that the truth was more fully laid bare in a series of corrective disclosures. As it became clear through a series of news reports and admissions by the Company that Zoom had significantly overstated the degree to which its video communication software was encrypted, and organizations consequently prohibited their employees from utilizing Zoom for work activities, the Company’s stock price plummeted, damaging investors.

CLASS DEFINITION

On behalf of all persons who purchased or otherwise acquired Zoom securities during the Class Period.

INITIAL FEDERAL FILING DATE

April 7, 2020

ELIGIBLE SECURITY ID’s

Zoom Video Communications, Inc. (ZM)
98980L101; BGSP7M9; BJCXG23; BJGV4Q3; BK8Y694; BK9LZ97; BKVG567; US98980L1017

CLASS PERIOD

April 18, 2019 to April 6, 2020

SETTLEMENT AMOUNT

N/A

CLAIM DEADLINE DATE

N/A

CLAIMS ADMINISTRATOR

N/A

COURT

USDC – California (Northern)

JUDGE

TBD

LEAD PLAINTIFF FIRMS

TBD

LEAD COUNSEL FIRM

Pomerantz LLP

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