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Austin-based SolarWinds shareholder files lawsuit, says company 'failed to disclose' hack details

The shareholder claims SolarWinds “misrepresented and failed to disclose” information about the hack.

AUSTIN, Texas — Editor's note: The Associated Press contributed to this report.

A shareholder for Austin-based SolarWinds has sued the company, its president and chief financial officer surrounding claims they lacked transparency about a hack revealed in a monthslong global cyberspying campaign, according to a lawsuit obtained by KVUE.

News of the hacks, first reported by Reuters back in December, came after FireEye disclosed that nation-state hackers had broken into its network and stolen the company’s own hacking tools.

The lawsuit claims that in light of the Reuters report, SolarWinds' shares fell $1.56 per share or 8% to close at $18.06 per share on Dec. 15, 2020, damaging investors.

SolarWinds confirmed Dec. 13 a “potential vulnerability” related to updates released between March and June for software products called Orion that help monitor networks for problems.

RELATED: Austin-based SolarWinds among US agencies hacked in monthslong global cyberspying campaign

“We believe that this vulnerability is the result of a highly-sophisticated, targeted and manual supply chain attack by a nation state,” said SolarWinds CEO Kevin Thompson said in a statement. 

He said it was working with the FBI, FireEye and intelligence community.

In the lawsuit, which was filed in U.S. district court for the Western District of Texas on Jan. 4, 2021, the shareholder claims SolarWinds “misrepresented and failed to disclose” information about the hack.

"As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages," the lawsuit reads.

He also claimed in the lawsuit that SolarWinds' president and chief financial officer had "knowledge of the material omissions and/or the falsity of the material statements," "intended to deceive" investors and acted with "reckless regard for the truth."

The shareholder is suing for damages, costs and expenses for himself and others who acquired shares of SolarWinds between Feb. 24 and Dec. 15, 2020.

READ THE FULL LAWSUIT HERE

FOR THE WESTERN DISTRICT OF TEXAS behalf of all others similarly situated, Case No: 1:21-cv-2 VIOLATION OF THE FEDERAL v. SECURITIES LAWS SOLARWINDS CORPORATION, KEVIN B. THOMPSON, and J. BARTON KALSU, Defendants.

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