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Zoom Says It’s Being Probed by SEC, Two U.S. Attorneys Offices

Dec. 19, 2020, 12:41 AM

Zoom Video Communications Inc. said it has provided information to multiple U.S. prosecutors and regulators regarding interactions with China and other overseas governments, as well as security and user privacy matters.

The U.S. Securities and Exchange Commission and two U.S. Attorney’s offices have been investigating Zoom for months, the San Jose, California-based company said Friday in a blog post and a filing. The videoconferencing company disclosed the legal and regulatory scrutiny the same day a former employee was charged by the U.S. Department of Justice for assisting China to block a remote gathering on the service commemorating the anniversary of the Tiananmen Square uprising.

The China-based staffer, Xinjiang Jin, who also goes by “Julien Jin,” was charged in absentia for conspiring to censor Chinese dissidents by disrupting the Zoom conference in June. Jin was meant to be Zoom’s liaison with Chinese authorities on national security requests, but instead did the government’s bidding in concert with other employees, prosecutors said. Zoom said it terminated Jin’s employment during the course of an internal investigation, and has placed employees suspected of assisting him on leave until it completes the inquiry.

Read more: Ex-Zoom China Employee Is Charged With Censoring Dissidents

The videoconferencing provider also said it had received a grand jury subpoena in June from the U.S. Attorney’s Office for the Eastern District of New York, requesting information about interactions with foreign governments and political parties, including the Chinese government. The federal prosecutors also sought details on the company’s storage of and access to user data, its privacy policies and its actions around the Tiananmen meetings that Jin had allegedly disrupted.

In July, Zoom received subpoenas from the U.S. Attorney’s Office for the Northern District of California and the SEC. Both sought documents and information about security and privacy matters, such as Zoom’s data encryption, how the company calculates usage metrics and public disclosures about each. The prosecutors also asked for information about contact between Zoom employees and representatives of the Chinese government, as well as if a foreign government had ever tried to or succeeded in influencing the company’s policies, practices or actions relating to U.S.-based users. Zoom said it was “fully cooperating” with the inquiries.

Zoom’s popularity has exploded during the coronavirus pandemic with millions of people forced to remain at home to help prevent the spread of Covid-19. Workers, students and families count on the video-meeting service to keep them connected to colleagues, teachers and loved ones. At the end of October, Zoom said it had 433,700 customers with more than 10 employees compared with 74,100 in the fiscal third quarter a year earlier. The company’s stock has jumped 500% this year, closing Friday at $406.01 in New York.

Zoom settled a case in November with the U.S. Federal Trade Commission, which accused the software maker of deceiving customers about its platform’s level of security.

To contact the reporter on this story:
Nico Grant in San Francisco at ngrant20@bloomberg.net

To contact the editors responsible for this story:
Jillian Ward at jward56@bloomberg.net

Andrew Pollack, Alistair Barr

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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