Shareholders Sue CrowdStrike Over Global Outage

 

CrowdStrike is being sued by shareholders following a global outage caused by a faulty software update from the cybersecurity firm, which impacted over eight million computers worldwide. The lawsuit accuses CrowdStrike of making "false and misleading" statements regarding its software testing practices and claims the company's share price plummeted by 32% in the 12 days after the incident, resulting in a market value loss of $25 billion (£14.5 billion).

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CrowdStrike denies the allegations and plans to defend itself against the proposed class action lawsuit filed in federal court in Austin, Texas. The suit alleges that CrowdStrike executives misled investors by asserting that the company's software updates were thoroughly tested. It seeks compensation for investors who owned CrowdStrike shares between November 29 and July 29.

The lawsuit references a statement by CEO George Kurtz, who had assured in a March 5 conference call that the firm's software was "validated, tested and certified." CrowdStrike has disputed these claims, with a spokesperson stating, “We believe this case lacks merit and we will vigorously defend the company.”

In the wake of the outage, Delta Air Lines CEO Ed Bastian reported in an interview with CNBC that the disruption cost the airline $500 million, including lost revenue and passenger compensation. Delta is reportedly preparing to seek compensation from CrowdStrike and has hired a prominent lawyer.

The faulty update on July 19 affected 8.5 million Microsoft Windows computers globally, disrupting businesses and services such as airlines, banks, and hospitals. CrowdStrike has attributed the outage to a "bug" in a system meant to ensure software updates functioned correctly, which allowed "problematic content data" to go undetected. The company has pledged to improve its software testing and checks to prevent future incidents.