SolarWinds (SWI) Public Statements and Losses to Investors Class Action

In December 2020, news emerged that hackers, possibly from the Russian government, had accessed US government and business systems through updates provided by a company called SolarWinds. This class action alleges that SolarWinds made false or misleading statements in its public filings that misled investors and inflated the price of SolarWinds securities. When information about the hacking and SolarWinds vulnerabilities became public, the value of its securities plummeted, causing losses to investors.

The class for this action is all persons (other than the defendants in this case) who acquired SolarWinds securities that were publicly traded on the New York Stock Exchange between February 24 and December 15, 2020, and who were thereby damaged.

The defendants in this case include the company, which offers information technology infrastructure management software to monitor and manage network, application, storage, database, and website infrastructure, and two individuals: Kevin B. Thompson, the company’s CEO, President, and Director, and J. Barton Kalso, the company’s CFO, Executive Vice-President, and Treasurer.

The class period begins with the filing of the company’s 10-K for the fiscal year that had ended on the last day of December in 2019. It contained certifications signed by Thompson and Kalso, as required under the Sarbanes-Oxley Act (SOX). The signed certifications, the complaint says, “attest[] to the accuracy of financial reporting, the disclosure of any material changes to the Company’s internal control over financial reporting and the disclosure of all fraud.”

The statements in the Form 10-K acknowledged the risks of cyberattacks, including those perpetrated by foreign governments or terrorists, and the fact that techniques used to breach or sabotage systems “generally are not identified until they are launched against a target…” and other, similar risks. After the Form 10-K, SolarWinds filed quarterly Form 10-Q statements on May 8, August 10, and November 5, 2020 that also contained SOX certifications signed by Thompson and Kalso.

The complaint says certain statements in these filings were materially false or misleading because they misrepresented and failed to disclose certain adverse facts. These included that SolarWinds had a vulnerability that would allow hackers to compromise its server, that it had the easily-accessible password of “solarwinds123,” that SolarWinds customers would suffer harm because of this, and that the company’s reputation would suffer. This, the complaint alleges, made its statements about its business, operations, and prospects “materially false and misleading and/or lack[ing] a reasonable basis…”

On December 13, 2020, Reuters published initial reporting on the activity of hackers allegedly working for the Russian government, including the monitoring of e-mail at the US Treasury and Commerce Departments; it also disclosed the apparent connection with “updates released by SolarWinds…”

At the news, SolarWinds stock fell by $3.93 per share, or 17%. A few days later, the stock fell by another $1.56 per share. These falls damaged investors.

The counts include violations of the 1934 Exchange Act.

Article Type: Lawsuit
Topic: Securities

Most Recent Case Event

SolarWinds (SWI) Public Statements and Losses to Investors Complaint

January 4, 2021

In December 2020, news emerged that hackers, possibly from the Russian government, had accessed US government and business systems through updates provided by a company called SolarWinds. This class action alleges that SolarWinds made false or misleading statements in its public filings that misled investors and inflated the price of SolarWinds securities. When information about the hacking and SolarWinds vulnerabilities became public, the value of its securities plummeted, causing losses to investors.

SolarWinds (SWI) Public Statements and Losses to Investors Complaint

Case Event History

SolarWinds (SWI) Public Statements and Losses to Investors Complaint

January 4, 2021

In December 2020, news emerged that hackers, possibly from the Russian government, had accessed US government and business systems through updates provided by a company called SolarWinds. This class action alleges that SolarWinds made false or misleading statements in its public filings that misled investors and inflated the price of SolarWinds securities. When information about the hacking and SolarWinds vulnerabilities became public, the value of its securities plummeted, causing losses to investors.

SolarWinds (SWI) Public Statements and Losses to Investors Complaint
Tags: Securities