WASHINGTON (dpa-AFX) - Shareholders have sued CrowdStrike after a faulty software update created a global IT outage last month, resulting in a significant drop in the company's share price.
The lawsuit, filed in Texas by Plymouth County Retirement Association, accused the cybersecurity firm of making 'false and misleading' statements regarding software testing.
Following the outage, which crashed over 8 million computers across the world, CrowdStrike's share price dropped 32 percent over the next 12 days, wiping out $25 billion of market value.
'Defendants had failed to disclose that: (1) CrowdStrike had instituted deficient controls in its procedure for updating Falcon and was not properly testing updates to Falcon before rolling them out to customers; (2) this inadequate software testing created a substantial risk that an update to Falcon could cause major outages for a significant number of the Company's customers; and (3) such outages could pose, and in fact ultimately created, substantial reputational harm and legal risk to CrowdStrike,' the suit stated.
The investors also pointed out that the U.S.-based company's Chief Executive George Kurtz had assured them during a conference call in March that CrowdStrike's software was 'validated, tested and certified'.
The lawsuit demands an unspecified amount of compensation for the investors who owned the company's shares between 29 November, 2023 and 29 July, 2024.
Responding to the lawsuit, a CrowdStrike spokesperson told to The Guardian, 'We believe this case lacks merit and we will vigorously defend the company.'
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