The US Securities and Exchange Commission has stepped in to clear up the worst case of mistaken identity on Wall Street, suspending the shares of Zoom Technologies, a small Chinese company that investors were confusing with Zoom, the video-calling app that has seen spectacular growth during the coronavirus pandemic.
The regulator said on Thursday that it was halting trading in the Beijing technology group, which uses the ticker ZOOM, until April 8 over concerns that investors were "confusing this issuer with a similarly-named Nasdaq-listed issuer?.?.?.?which has seen a rise in share price during the ongoing Covid-19 pandemic".
Silicon Valley videoconferencing app Zoom Video Communication, which floated in April 2019, has experienced an explosion in popularity as millions confined to their homes under national lockdowns have used it to host group meetings as well as social catch-ups.
Its shares have more than doubled since the beginning of the year, giving it a market capitalisation of $40.3bn.
By contrast, Zoom Technologies’ stock has risen tenfold since the beginning of the year, including a dramatic rally on Friday last week followed by a sudden drop, although its valuation is a far tinier $31.3m.
The Chinese company was also suspended because it has failed to issue any public disclosures since 2015, the SEC said, raising questions over its finances and whether it even has any ongoing operations. The company voluntarily delisted from the Nasdaq exchange in 2014, filings show.
The SEC added that "unsolicited customer quotations for its common stock are quoted by broker-dealers?.?.?.?under the ticker symbol ZOOM" on an interdealer quotation system operated by OTC Markets Group.
It is not the first time the small group, a Delaware corporation, has benefited from its larger namesake: its stock also jumped more than 80 per cent on the day of Zoom’s 2019 listing.
"The Commission cautions broker-dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company," the SEC said.
(Published by Financial Times, March 27, 2020)
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