CrowdStrike Sued by Shareholders Over Outage

Shareholders have sued CrowdStrike following the outage that crashed 8 million computers on July 19. The class action suit claims that CrowdStrike defrauded its shareholders by not being transparent regarding its software testing and the associated risk when deploying software.

CrowdStrike’s share price fell by more than 32% in the 12 days following the outage, removing $25 billion in market value.

The lawsuit was filed in a federal court in Austin, Texas, by the Plymouth County Retirement Association. It seeks damages on behalf of “all persons and entities who purchased or otherwise acquired CrowdStrike Class A common stock between November 29, 2023 and July 29, 2024.”

The lawsuit claims that CrowdStrike had insufficient testing processes of Falcon (the software that caused the outage) before releasing updates to customers while assuring investors that its product was being “validated, tested and certified.” As a result of these actions, the lawsuit claims the share price was inflated during the period in question.

CrowdStrike’s Chief Executive Officer and President, George Kurtz, and Chief Financial Officer, Burt W. Podbere, were both named as co-defendants in the lawsuit.

A spokesperson from CrowdStrike said, “We believe this case lacks merit, and we will vigorously defend the company.”

Additional lawsuits may come in as the full impact of the outage becomes understood. The Consumer Law Group is investigating a Canada-wide class action lawsuit to support large and small businesses that have been affected, either directly or indirectly, by being unable to process transactions with CrowdStrike customers.

Delta Air Lines is also discussing with a legal team whether to seek damages following the $500 million lost due to the outage. This loss resulted from direct revenue impacts and compensation they owed disrupted passengers, such as providing hotel rooms.

CrowdStrike builds an anti-virus software included in Microsoft Windows that is deployed primarily for their corporate solutions. On July 19, CrowdStrike deployed an update that caused Windows systems to crash worldwide, causing outages across many industries.