Zoom has agreed to settle investors’ claims that it issued misleading statements about its cybersecurity.
Zoom and plaintiffs’ attorneys filed a joint notice for preliminary approval of the proposed $150 million settlement on Wednesday in San Francisco federal court.
Lead plaintiffs’ counsel seeks expenses and an award of attorneys’ fees equaling 18.75% of the settlement amount – or $28,125,000. Each certified class member, defined as any individual who purchased shares in Zoom between 18 April 2019 and 6 April 2020, will obtain at least $10, according to yesterday’s motion.
Zoom stockholders initially filed a complaint in April 2020 accusing Zoom of violating the Securities Exchange Act 1934 by making misleading statements about its cybersecurity and end-to-end encryption features.
According to the complaint, reports on 30 March 2020 that the New York Attorney General’s Office was investigating Zoom’s cybersecurity and privacy practices caused Zoom’s stock price to plummet that day from $160.76 to $150.88 per share. After additional reports of Zoom’s cybersecurity lapses and Zoom’s chief executive apologising for the company’s missteps in April, shares further dropped and closed at $113.75 on April 7, 2020.
Zoom did not respond to a request for comment.
Counsel to plaintiffs
Pomerantz
Partners Jennifer Pafiti in Los Angeles, Jeremy Lieberman and J. Alexander Hood II in New York
Counsel to Zoom
Cooley
Partners Patrick Gibbs and Tijana Brien in Palo Alto and Craig TenBroeck in San Diego are assisted by Reza Harris and Jenna Bailey