REVIEW FROM THE JULY 19 GLOBAL IT OUTAGE AS SHAREHOLDERS SUE CROWDSTRIKE OVER OUTAGE

A lawsuit has been instituted by shareholders against CrowdStrike following the July 19 global IT outage that crashed over 8.5 million Microsoft windows computers around the world.

The outage was supposedly caused by a faulty software update, CrowdStrike has since carried out a comprehensive review of the incident, and in the final report of the review, the company said there was a “bug” in a system designed to ensure software updates worked properly.

The company went further to say that the glitch meant “problematic content data” in a file went undetached but however assured it could prevent a repeat of the incident through better software testing and checks, including more scrutiny from developers.

But the report of the review isn’t going well with some shareholders, this has led to a lawsuit against CrowdStrike accusing the company of “false and misleading” statements about its software testing.

The claim in the suit

In a suit filed in the Austin, Texas federal court, the shareholders cited CrowdStrike chief executive George Kurtz statement in a conference call on 5 March in which the chief executive confirmed the firm’s software as “validated, tested and certified” and are therefore alleging that CrowdStrike defrauded investors by misleading them in believing that the company’s software updates were adequately tested.

They claim the company’s share price dropped 32% in the 12 days after the incident, which caused a loss in market value of $25bn (£14.5bn).

Shareholders are seeking for compensation

With many companies counting their losses, shareholders are demanding for compensation for investors who owned shares between 29 November 2023 and 29 July 2024.

Specifically, Delta Airlines said it has hired a prominent lawyer and is prepared to seek for compensation from CrowdStrike after it lost $500m in lost revenues and compensation to passengers as a result of the outage. CrowdStrike has disputed the claims of deliberate defrauding insisting it lacked merit and will vigorously be defended.

In a cheering news, the company has said computers affected by the global outage are effectively back online ten days after the incident started.