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Law360 (March 26, 2020, 1:24 PM EDT ) Trading for shares of Zoom Technologies Inc., which has seen its stock price explode in the past two months, was suspended by the U.S. Securities and Exchange Commission on Thursday morning over fears the company was being mistaken for the booming Zoom Video Communications.
The latter Zoom, a provider of video communication services, has seen its share price double this year as the coronavirus pandemic sends businesses flocking for telework solutions. The SEC issued an order late Wednesday stating that it would temporarily halt trading for Zoom Technologies, a Beijing-based company that hasn't made a public disclosure since 2015.
The order specifically cited "concerns about investors confusing this issuer with a similarly named Nasdaq-listed issuer providing communications services, which has seen a rise in share price during the ongoing COVID-19 pandemic."
The regulator was more direct in a tweet Thursday morning, stating that "Zoom Technologies (ticker ZOOM) is NOT the similarly-named popular video communications company. Today the SEC suspended trading in the securities of Zoom Technologies."
ZOOM was trading at $10.40 per share when the market closed Wednesday. The penny-stock issuer first saw trading activity in the month before Zoom Video Communications — ticker ZM — went public at an initial public offering price of $36 per share last April. Price movements in the tech unicorn's stock over the past year seem to be roughly mimicked by those for ZOOM.
The latest surge in ZOOM's price unsurprisingly came as the COVID-19 pandemic expectedly bolstered Zoom Video Communications' position as an attractive option for investors in a time of broader market uncertainty. Market data shows ZOOM hit a high of $35 per share on March 20 before retreating to roughly $10 in its final two days of trading.
The SEC said it had concerns about the adequacy and accuracy of publicly available information about ZOOM, including its financial condition and operations, and ordered that trading for the stock on over-the-counter markets must be halted until April 8.
The agency cautioned brokers to be wary of the company after the trading suspension is lifted and asked any who might have information about the matter to reach out to the SEC's New York office.
Contact information for Zoom Technologies was not immediately available Thursday.
--Editing by Orlando Lorenzo.
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