SolarWinds investors believe that top executives have purposely withheld information about stocks.
SolarWinds shareholders filed a class action lawsuit against the company, its CEO Kevin Thompson and its CFO Barton Kalsu after a cyber attack on its management software impacted the supply chain. The class claims “SolarWinds lied to them and materially misled them” in how security was handled, resulting in the Orion software violation that “resonated across the public and private sectors.” The class includes buyers who publicly traded SolarWinds securities from February 24 to December 15, 2020 over the past year.
The complaint alleges that each defendant was directly involved in the company’s day-to-day business, “received confidential information about business operations and the monitoring of internal controls, and made false and misleading statements that violated the Securities Act.” Court documents indicate that Thompson and Kalsu were “aware of the adverse non-public information about SolarWinds’ corporate governance and business prospects through their senior positions.” The plaintiffs believe that they negligently ensured adequate supervision and actively misled shareholders.
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“The defendant knew that the public documents and statements issued or distributed on behalf of SolarWinds were materially inaccurate and misleading. knew that such statements or documents would be made or disseminated to the investing public; and have knowingly and substantially participated in such statements or documents as primary violations of securities laws, ”the class attorneys wrote. “Had the plaintiff and the other members of the class known that the market price of SolarWinds securities would have been artificially and erroneously increased as a result of defendant’s misleading statements and material adverse information not disclosed by defendants,” the shareholders would have said their information not made purchases.
In a December filing with the Securities and Exchange Commission, SolarWinds said, “An investigation found that malicious hackers – attributed to a group with ties to the Russian government – malicious hackers – inserted the corrupted code into the build system between March and June 2020 Orion’s share price fell instantly, and more news of poor security fell in the days after SolarWinds shares continued to decline. “
The company stated, “Despite our security measures, unauthorized access to or security breach of our software or systems could result in the loss, compromise or corruption of data, loss of business, serious reputational damage that undermines the trust of customers or investors in an investigation and orders, legal disputes, indemnification obligations, damages for breach of contract, penalties for violating applicable laws or regulations, significant costs for remediation and other liabilities. We have incurred and expect significant costs to prevent security breaches, including deploying additional personnel and protection technology, training staff, and engaging third-party experts and consultants. Our error and omission insurance, which covers certain security and privacy damages, and claims costs, may not be sufficient to offset all of the liabilities we have incurred. “
The class is moving to “a jury trial” to determine the extent of Thomspon and Kalsu’s involvement, and plaintiffs are seeking damages, “fair” payment for their legal fees and other facilities, from both the company and the named individuals. “Allowed by the court.
SolarWinds, top executives, on class action lawsuit for breach of Orion software
SolarWinds class action lawsuit after Orion breach
Class action complaint