Zoom Video Communications (ZM) $150M Shareholder Settlement
Zoom recently agreed to pay $150M to settle claims from investors. The settlement resolves claims that Zoom hid problems with its software encryption and shared personal information with third parties.
Outline
Back in 2020, Zoom was accused of hiding problems with its software encryption, vulnerability to hackers, and sharing personal information with third parties. Much news has been reported on significant flaws in Zoom's data privacy and security measures. Following this, $ZM significantly fell, and Zoom faced a lawsuit from investors.
Timeline
On July, 2019: News reported that Zoom's software had security issues related to encryption.
On March 26, 2020: Press releases revealed that user data was vulnerable to third parties, including Facebook.
On March 27, 2020: After this news came out, $ZM fell 19%.
On May 18, 2020: The stockholder filed a suit against Zoom for misleading people about its encryption and security measures.
On July 12, 2023: Zoom reached an agreement to resolve investors’ claims for $150 million.
Background
In July 2019, reports came out about major security problems with Zoom's software encryption, raising concerns about its ability to protect user data.
Despite these concerns, Zoom claimed it had full end-to-end encryption. However, it was found that Zoom was using transport encryption, which is less secure. Further news revealed that Zoom exaggerated its encryption capabilities, making user data vulnerable to third parties, including Facebook.
On March 27, 2020, after these security issues were disclosed, $ZM dropped by 19.62%.
After that, in 2020, Zoom was sued by shareholders who claimed the company misled them about its data privacy and security, especially its encryption.
What can investors expect now?
Zoom has agreed to pay $150M to settle claims from investors to resolve all the allegations related to the security problems.
If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section below.
Frequently Asked Questions
All persons that purchased or otherwise acquired Zoom Common Stock and/or Zoom Option Contracts between April 18, 2019, and April 6, 2020, inclusive, and were damaged thereby.
No, if you have purchased securities within the class period, you are eligible to participate.
You can participate in the settlement and retain (or sell) your securities.
The final payout amount depends on your specific trades and the number of investors participating in the settlement.
If 100% of investors file their claims - the average payout will be $3.08 per share. Although typically only 25% of investors file claims, in this case, the average recovery will be $12.32 per share.
The entire process usually takes 4 to 9 months after the claim deadline. But the exact timing depends on the court and settlement administration.
11thestate is an investor recovery company, we help investors to track and collect securities class action settlements. We will:
Prepare documents for your payout
Audit the claim and make sure you get the maximum possible payout
File a claim with the settlement administration
Correspond with the settlement administration to resolve emerging issues
Deliver payout directly to your brokerage account
There is no upfront cost, but we will deduct 20% of the recovered amount as a commission for our services.