New York, New York–(Newsfile Corp. – April 20, 2020) – Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Zoom Video Communications, Inc. (“Zoom” or the “Company”) (NASDAQ: ZM) of the June 8, 2020 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
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If you invested in Zoom stock or options between April 18, 2019 and April 6, 2020 and would like to discuss your legal rights, click here: http://www.faruqilaw.com/ZM. There is no cost or obligation to you.
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The lawsuit has been filed in the U.S. District Court for the Northern District of California on behalf of all those who purchased Zoom securities between April 18, 2019 and April 6, 2020 (the “Class Period”). The case, Drieu v. Zoom Video Communications, Inc. et al., No. 5:20-cv-02353 was filed on April 7, 2020.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) Zoom had inadequate data privacy and security measures; (2) contrary to Zoom’s assertions, the Company’s video communications service was not end-to-end encrypted; (3) 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; (4) usage of the Company’s video communications services was foreseeably likely to decline when the foregoing facts came to light; and (5) as a result, the Company’s public statements were materially false and misleading at all relevant times.
On July 8, 2019, during intraday trading hours, security researcher Jonathan Leitschuh linked an article published by him that day to his Twitter account, which allegedly exposed a flaw allowing hackers to take over Zoom webcams. According to the article, “[a] vulnerability in the Mac Zoom Client allows any malicious website to enable your camera without your permission,” and “[t]he flaw potentially exposes up to 750,000 companies around the world that use Zoom to conduct day-to-day business.”
On this news, the Company’s stock price fell from $91.88 per share on July 5, 2019 to $90.76 per share on July 8, 2019: a $1.12 or 1.22% drop.
Then, on July 11, 2019, public interest research center the Electronic Privacy Information Center filed a complaint against Zoom before the U.S. Federal Trade Commission (“FTC”), alleging that the Company “placed at risk the privacy and security of the users of its services,” that “Zoom intentionally designed their web conferencing service to bypass browser security settings and remotely enable a user’s web camera without the consent of the user,” and that, “[a]s a result, Zoom exposed users to the risk of remote surveillance, unwanted videocalls, and denial-of-service attacks.” The complaint also alleged that “[w]hen informed of the vulnerabilities Zoom did not act until the risks were made public, several months after the matter was brought to the company’s attention,” that “Zoom exposed its users to a wide range of harms, many of which are ongoing,” and that the Company’s “business practices amount to unfair and deceptive practices under Section 5 of the FTC Act, subject to investigation and injunction by the [FTC].”
On this news, Zoom’s stock fell $1.32 per share, or 1.42%, to close at $91.40 per share on July 11, 2019.
Then, on March 27, 2020, Zoom issued a statement by Defendant Yuan, disclosing “a change that [Defendants] have made regarding the use of Facebook’s SDK” after being “made aware on Wednesday, March 25, 2020, that the Facebook SDK was collecting device information unnecessary for us to provide our services.” Yuan admitted that “[t]he information collected by the Facebook SDK did not include information and activities related to meetings such as attendees, names, notes, etc., but rather included information about devices such as the mobile OS type and version, the device time zone, device OS, device model and carrier, screen size, processor cores, and disk space,” and that, “therefore [Defendants] decided to remove the Facebook SDK in [the] iOS client and have reconfigured the feature so that users will still be able to log in with Facebook via their browser.”
The next trading day, on March 30, 2020, the New York Times reported that Zoom is under scrutiny by the office of New York State Attorney General, Letitia James, “for its data privacy and security practices.” According to the article, James’s “office sent Zoom a letter asking what, if any, new security measures the company has put in place to handle increased traffic on its network and to detect hackers” in light of the recent COVID-19 pandemic.
As a result of these disclosures, the Company’s stock price fell from $151.70 on March 27, 2020 to $121.93 per share on April 2, 2020: a $29.77 or 19.62% drop.
On April 6, 2020, New York City’s Department of Education announced that it had banned the use of Zoom in the city’s classrooms, and the city’s mayor, Bill de Blasio, disclosed that there had “been an effort by the Department of Education to work with that company to ensure the privacy of our students to make sure their information could not be accessed wrongly,” but that “[t]he chancellor and the team at the Department of Education do not believe the company has cooperated.” Consequently, the city’s Department of Education instead recommended Google or Microsoft Teams for classroom communications purposes amid the state’s shelter-in-place order during the COVID-19 pandemic.
On this news, the Company’s stock price fell from $128.20 per share on April 3, 2020 to $122.94 per share on April 6, 2020: a $5.26 or 4.10% drop.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Zoom’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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