The US Securities and Exchange Commission (SEC) has taken action by suspending the shares of a small Chinese company called Zoom Technologies after investors were confusing it with the video-calling app Zoom.
The regulator recently revealed that it was halting trading of the Beijing-based company's shares until April 8th over concerns that investors were “confusing this issuer with a similarly-named NADAQ-listed issuer... which has seen a rise in share price during the ongoing Covid-19 pandemic.”
Silicon Valley-based Zoom Video Communications went public in April of last year and the company's video conferencing app has seen a surge in new users as a result of the fact that many employees are now working from home.
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The app has also seen increased adoption as it is quite easy to set up and use by families and friends looking to stay in touch while under lockdown.
Mistaken identity
Shares of Zoom Video Communications have more than doubled since the beginning of the year and the company now has a market capitalization of $40.3bn. Zoom Technologies on the other hand, has seen its stock rise tenfold since the beginning of the year, though its valuation is much smaller at $31.3m.
In addition to confusion between the two companies as Zoom Technologies uses the ticker ZOOM, the Beijing-based firm was also suspended because it has failed to issue an public disclosures since 2015 according to the SEC. Filings also show that the company voluntarily delisted from the NASDAQ exchange back in 2014.
Back in April when Zoom Video Communications went public, Zoom Technologies also benefited as its stock jumped by more than 80 percent.
By suspending the shares of Zoom Technologies, the SEC has helped investors by preventing them from dumping even more money into a company that likely shouldn't even be on their radar.
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