"US District Judge Robert Pitman of the Western District of Texas ruled [PDF] on Monday that, while he agreed two of those statements were plausibly misleading, the shareholders failed to plausibly plead that they were made with the intent to defraud investors, a required element of a securities-fraud claim. "Plaintiffs have failed to plausibly plead a strong inference of scienter [intent or knowledge of wrongdoing] for the individual Defendants or for CrowdStrike itself," Pitman opined."
"For those who don't recall CrowdStrike's terrible, horrible, no good, very bad day in July 2024, the world ground to a halt after the company pushed a faulty Falcon sensor content configuration update for Windows. The update was malformed, and CrowdStrike's internal validation system, designed to ensure updates didn't cause serious snafus, failed to catch the issue, as the company later explained in a post-mortem."
Shareholders sued CrowdStrike over losses after a July 2024 global outage caused by a malformed Falcon sensor content configuration update for Windows. Plaintiffs alleged 15 misleading statements from CrowdStrike leadership and sought to represent a class including institutional investors. US District Judge Robert Pitman found two statements plausibly misleading but ruled that plaintiffs failed to plausibly plead scienter, the required intent to defraud. The court granted defendants' motion to dismiss due to insufficient allegations of intent. CrowdStrike acknowledged the update error and its internal validation failure, which precipitated a sharp share-price decline and investor uncertainty.
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