A man who owns Zoom Video Communications stock sued the San Jose videoconferencing startup, claiming violations of federal securities law.
Michael Drieu filed the class action lawsuit against Zoom, its CEO Eric Yan and CFO Kelly Steckelberg in the Northern District of California on April 7 claiming he was damaged by materially false and misleading reports, filings, releases and statements that misrepresented the truth about Zoom’s finances and business prospects, according to the complaint.
“Defendants engaged in a plan, scheme, conspiracy and course of conduct, pursuant to which they knowingly or recklessly engaged in acts, transactions, practices and courses of business which operated as a fraud and deceit upon Plaintiff and the other members of the Class,” wrote Drieu’s attorney Jennifer Pafiti in the complaint.
Drieu further alleges that defendants failed to disclose that Zoom had inadequate data privacy and security measures, which results in users being put at risk for having their personal information accessed by unauthorized parties, such as Facebook.
But attorney Mike Arias sees the lawsuit as something that Zoom will overcome due to social distancing orders in response to the COVID-19 outbreak making its services indispensable.
“Zoom is the fastest-growing company in the world right now,” Arias told the Southern California Record. “I use it along with many others working within the justice system.”
As previously reported in Economic Times, on March 29 some 600,000 people downloaded Zoom, according to mobile app tracker Apptopia, and on March 30 its iOS app became Apple’s App Store most downloaded freebie.
“It was just a matter of time before Zoom was sued because it was inevitable there would be a breach or hack but they will continue to operate,” Arias said. “My hope is that from this proceeding, best practices, standards and protections will be implemented and that the use of this technology will be more efficient even after COVID-19 social distancing ends.”