CrowdStrike Faces Federal Securities Class Action from Investors

Investors have filed a federal securities class action lawsuit against CrowdStrike in the Western District of Texas, following a software outage that severely impacted various global sectors, including aviation, healthcare, and banking. The lawsuit, initiated by the Plymouth County Retirement Association and represented by the law firm Labaton Keller Sucharow, targets all individuals and entities that acquired CrowdStrike Class A common stock between November 29, 2023, and July 29, 2024. The plaintiffs allege that CrowdStrike made misleading statements and omissions about its Falcon platform’s efficacy and update controls, leading to artificially inflated stock prices.

On July 19, 2024, an update to CrowdStrike’s Falcon platform caused widespread outages, leading to an 11% drop in CrowdStrike’s stock price. The situation worsened as Delta Air Lines hired attorney David Boies to seek damages, resulting in further declines. The lawsuit also names CrowdStrike’s CEO George Kurtz and CFO Burt W. Podbere as defendants, accusing them of failing to disclose the inadequate testing and controls for the software updates. CrowdStrike has denied the allegations, asserting that the case lacks merit and pledging a vigorous defense.

The plaintiffs seek to recover damages for the significant financial losses incurred due to the stock price drop and the subsequent reputational and legal risks faced by CrowdStrike. This case highlights the critical importance of robust software update controls and transparency in communications with investors.