The US Securities and Exchange Commission (SEC) has taken action by suspending the shares of a small Chinese company called Zoom Technologies after investors mistook it for the video calling app Zoom. The regulator recently revealed that it was suspending trading in the Beijing-based company's shares until April 8, fearing investors "would confuse this issuer with a NADAQ-listed issuer of the same name... that has seen an increase in ongoing action 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 an increase in the number of of new users, as many employees are now working from home.The app has also seen increased adoption, as it's fairly easy to set up and use for families and friends who want to stay in touch while on lockdown.
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Zoom Video Communications' shares have more than doubled since the start of the year and the company now has a market capitalization of €40.3 billion. Zoom Technologies, on the other hand, has seen its shares rise tenfold since the start of the year, though its valuation is much lower at €31.3 million. Adding to the confusion between the two companies, Zoom Technologies using the ZOOM ticker, the Beijing-based company has also been suspended as it has not published a disclosure since 2015 according to the SEC. The documents also show that the company voluntarily delisted from the NASDAQ stock exchange in 2014. In April, when Zoom Video Communications went public, Zoom Technologies also benefited from a more than 80% increase in its stock. By suspending shares of Zoom Technologies, the SEC has helped investors by preventing them from paying even more money on a deal that probably shouldn't even be on their radar. Via the Financial Times