They said that as the effects of the outage became known, Chief Executive George Kurtz was called to testify before the US Congress, and Delta Air Lines reportedly hired well-known attorney David Boies to seek damages. CrowdStrike’s share price fell 32% over the next 12 days, wiping out $25 billion of market value.
Shareholders have filed a lawsuit against CrowdStrike, claiming the cybersecurity startup misled them by failing to disclose how its subpar software testing may have contributed to the July 19 worldwide outage that brought down over 8 million machines. A proposed class action was filed in federal court in Austin, Texas, on Tuesday night. The shareholders of CrowdStrike claimed that after a software update went wrong and caused disruptions to emergency lines, hospitals, banks, airlines, and emergency rooms worldwide, they discovered that the company had made materially false and misleading claims about its technology.
They said that as the effects of the outage became known, Chief Executive George Kurtz was called to testify before the US Congress, and Delta Air Lines reportedly hired well-known attorney David Boies to seek damages. CrowdStrike’s share price fell 32% over the next 12 days, wiping out $25 billion of market value. The March 5 conference call is one of the comments from which Kurtz characterizes CrowdStrike’s software as “validated, tested, and certified.” Kurtz made this claim in the complaint.
The Austin-based CrowdStrike stated in a statement on Wednesday that “we believe this case lacks merit and we will vigorously defend the company.”
Defendants also include Kurtz and Chief Financial Officer Burt Podbere. Holders of CrowdStrike Class A shares between November 29, 2023, and July 29, 2024, are seeking unspecified damages in a lawsuit brought by the Plymouth County Retirement Association of Plymouth, Massachusetts.
When unanticipated bad news lowers stock prices, shareholders frequently file lawsuits against the company; CrowdStrike may be subject to more of them. The disruption cost Delta $500 million, according to CEO Ed Bastian, who spoke with CNBC on Wednesday. This amount included missed revenue, compensation, and lodging for stranded travelers. On Wednesday, CrowdStrike’s stock ended the day at $231.96, down $1.69. The day before the outage, they closed at $343.05. CrowdStrike Inc. et al. v. Plymouth County Retirement Association, U.S. District Court, Western District of Texas, No. 24-00857, is the case in question.
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