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Investigations  /  06.25.2020

Investigation of Zoom Video Communications

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Zoom Video Communications, Inc. (ZM) Accused of Misleading Shareholders 

According to the complaint, in April 2019, Zoom Communications, Inc. (ZM) conducted its initial public offering (“IPO”) touting the Company’s “robust security capabilities, including end-to-end encryption…” Belying this statement, Zoom’s privacy and security flaws were revealed as early as July 2019. Nevertheless, Zoom executives continued to tout its security and integration features.  On March 26, 2020, Vice Media reported that Zoom “is not forthcoming with the data collection or the transfer of it to Facebook.” And, on March 30, 2020, The New York Times reported that Zoom was under scrutiny by the office of New York State Attorney General “for its data privacy and security practices.” Further, several consumers have filed lawsuits against the Company for “illegally disclosing personal information.” Multiple other news outlets have revealed that Zoom did not actually have its purported end-to-end encryption for video and audio content. As a result, multiple organizations banned the use of Zoom’s software. Finally, on April 6th, 2020, Yahoo! Finance reported that “an actor in a popular dark web forum posted a link to a collection of 352 compromised Zoom accounts.” Following all of these disclosures, Zoom’s stock price fell 13% from its closing price of $141.15 on March 26, 2020 to close at $122.94 per share on April 6, 2020.

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