CrowdStrike is sued by shareholders over huge software outage

CrowdStrike has been sued by shareholders who said the cybersecurity company defrauded them by concealing how its inadequate software testing could cause the July 19 global outage that crashed more than 8 million computers.

In a proposed class action filed in the Austin, Texas federal court, shareholders said they learned that CrowdStrike's assurances about its technology were materially false and misleading when a flawed software update disrupted airlines, banks, hospitals and emergency lines around the world.

They said CrowdStrike's share price fell 32 percent over the next 12 days, wiping out US$25 billion ($38.5 billion) of market value.

As the outage's effects became known, chief executive George Kurtz was called to testify to the US Congress, and Delta Air Lines reportedly hired prominent lawyer David Boies to seek damages.

The complaint cites statements including from a March 5 conference call where Kurtz characterised CrowdStrike's software as "validated, tested and certified."

In a statement CrowdStrike said: "We believe this case lacks merit and we will vigorously defend the company".

Kurtz and chief financial officer Burt Podbere are also defendants.

The lawsuit led by the Plymouth County Retirement Association of Plymouth, Massachusetts, seeks unspecified damages for holders of CrowdStrike Class A shares between November 29, 2023 and July 29, 2024.

Shareholders often sue companies after unexpected negative news causes stock prices to fall, and CrowdStrike could face more lawsuits.

Delta chief executive Ed Bastian told CNBC this week that the outage cost his airline US$500 million, including lost revenue and compensation and hotels for stranded fliers.

CrowdStrike is sued by shareholders over huge software outage

CrowdStrike is sued by shareholders over huge software outage

CrowdStrike is sued by shareholders over huge software outage

CrowdStrike is sued by shareholders over huge software outage

CrowdStrike is sued by shareholders over huge software outage