CrowdStrike is facing a lawsuit from shareholders after a faulty software update caused chaos worldwide by crashing more than eight million computers.
The cybersecurity firm is accused of making “false and misleading” statements about its software testing.
The lawsuit, filed in Austin, Texas, claims that CrowdStrike executives misled investors by assuring them that software updates were properly tested. It alleges that the company’s share price dropped by 32% in just 12 days following the incident, leading to a loss of $25 billion (£14.5 billion) in market value.
CrowdStrike denies the accusations. A company spokesperson said, “We believe this case lacks merit and we will vigorously defend the company.”
The suit is seeking compensation for investors who owned CrowdStrike shares between November 29 and July 29. It cites a statement from CrowdStrike CEO George Kurtz, who said in a conference call on March 5 that the firm’s software was “validated, tested and certified.”
The faulty update on July 19 caused problems for 8.5 million Microsoft Windows computers globally. The outage affected various sectors, including airlines, banks, and hospitals. Delta Air Lines CEO Ed Bastian revealed in an interview with CNBC that the disruption cost the airline $500 million in lost revenue and compensation to passengers. Delta is now considering legal action against CrowdStrike.
CrowdStrike has explained that the incident was due to a “bug” in a system meant to ensure software updates worked correctly. The company said the bug allowed “problematic content data” to go undetected.
CrowdStrike believes improved software testing and developer scrutiny can prevent similar issues in the future.
