The complaint cites statements including from a March 5 conference call where Kurtz characterised CrowdStrike’s software as “validated, tested and certified”
Shareholders filed a lawsuit against CrowdStrike for fraudulently hiding information that insufficient software testing could have caused the global system collapse on July 19, impacting over eight million computers.
In a proposed class action filed on Tuesday night in the Austin, Texas federal court, shareholders said they learned that CrowdStrike’s assurances about its technology were materially false and misleading when a flawed software update disrupted airlines, banks, hospitals and emergency lines around the world.
They said CrowdStrike’s share price fell 32% over the next 12 days, wiping out $25 billion of market value. As the effects of this outage became apparent Chief Executive George Kurtz was called upon to testify before Congress and Delta Air Lines reportedly engaged prominent lawyer David Boies seeking reparations.
The complaint cites statements including from a March 5 conference call where Kurtz characterised CrowdStrike’s software as “validated, tested and certified.”
A statement made by Austin-based CrowdStrike yesterday said: “We believe this case lacks merit and we will vigorously defend the company.”
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Kurtz and Chief Financial Officer Burt Podbere are also defendants.
Plymouth County Retirement Association of Plymouth in Massachusetts leads the suit that seeks unspecified damages for holders of CrowdStrike Class A shares between Nov. 29, 2023 and July 29, 2024.
CrowdStrike could face more lawsuits as shareholders often sue companies whose stock prices fall unexpectedly due to negative news reports.
On Wednesday Delta CEO Ed Bastian told Parami News that his airline suffered losses totaling $500m as a result of delays causing lost revenue compensations and hotels for stranded passengers.
CrowdStrike shares closed on Wednesday down $1.69 at $231.96. They closed at $343.05 on the day before the outage.
The case is Plymouth County Retirement Association CrowdStrike Inc et al, U.S. District Court, Western District of Texas, No. 24-00857.
