Zoom Video Communications Inc. investors who accused the company of misleading them about software encryption flaws have a lead plaintiff following a federal judge in California’s appointment order.
Investor Adam Butt has the most to gain from the suit, the U.S. District Court for the Northern District of California said. Butt allegedly lost more than $209,000 after Zoom’s security issues became public toward the start of the coronavirus pandemic.
A group of investors who collectively lost nearly $709,000 also moved for appointment as lead plaintiff. But they didn’t “claim to have any pre-existing relationship,” so the court won’t “consider this aggregate loss in determining the presumptive lead plaintiff,” Judge James Donato said Wednesday.
The investor group argued that it “should still be considered the presumptive lead plaintiff based on the total loss claimed by one of its members,” the order said. Butt’s loss is nearly twice the recoverable portion of the other investor’s, though, Donato said.
“Despite the Zoom Investor Group’s ill-advised attempt to reserve the right to address Butt’s typicality and adequacy in their opposition,” they failed to “do so in their reply,” so they “forfeited the opportunity to dispute his showing,” the order said.
Donato also saw “no reason to disagree” with Butt’s selection of Robbins Geller Rudman & Dowd LLP as lead counsel.
Cooley LLP represents Zoom.
The case is In re Zoom Sec. Litig., N.D. Cal., No. 20-cv-02353, lead plaintiff appointed 11/4/20.