CrowdStrike shareholders have filed a lawsuit against the cybersecurity company after a faulty software update caused millions of devices around the world to crash.
The lawsuit, filed in Austin, Texas, accuses CrowdStrike of making “false and misleading” statements about its software testing procedures.
According to the company, its stock price dropped as much as 32% within 12 days of the incident, resulting in a loss of $25 billion in market value.
Shareholders sue CrowdStrike after outage
Then, those who owned shares between November 29 and July 29 are demanding undisclosed compensation, alleging that executives defrauded investors by falsely assuring them that software updates had been thoroughly tested.
On March 5, CEO George Kurtz stated that the company’s software had been “validated, tested and certified.”
A business person told the BBC: “We believe this case has no merit and we will vigorously defend the company.”
The problems were caused by a bug in the system designed to ensure the proper functioning of software updates, which could allow “problematic content data” in a file to go undetected.
About the current incident report pageCrowdStrike stated that virtually all devices had been recovered: “Using a week-over-week comparison, ~99% of Windows sensors are online as of July 29 at 5:00 PM PT, compared to before the content update. We typically see a ~1% week-over-week variation in sensor connections.”
The disruption hit Delta Airlines particularly hard, costing the airline about $500 million in lost revenue and passenger compensation. The company had to cancel more than 5,000 flights and manually reset 40,000 servers.
Delta CEO Ed Bastian has indicated that the airline will seek damages from CrowdStrike, stating, “We have no choice.” The company has reportedly enlisted the help of well-known attorney David Boies to seek damages from both CrowdStrike and Microsoft.