SolarWinds Corporation (SWI) Misled Shareholders About Its Security Safeguards
SolarWinds regularly touted its robust security controls and commitment to prioritizing customers’ security and privacy concerns. In reality, the Company failed to employ adequate cybersecurity safeguards and did not maintain effective monitoring systems to detect and neutralize security breaches. On December 13, 2020, Reuters reported that hackers allegedly working for the Russian government had monitored email traffic at the U.S. Treasury and Commerce departments and had gained access to the agencies’ email traffic by interfering with updates released by SolarWinds, which services various government vendors in the executive branch, the military, and the intelligence services. In an 8-K filed with the U.S. Securities and Exchange Commission the next day, SolarWinds confirmed that its Orion monitoring products had been hacked. SolarWinds further disclosed that the network of as many as 18,000 customers might have been compromised by the maliciously coded Orion updates. On this news, SolarWind’s stock fell approximately 17% to close at $19.62 per share on December 14, 2020.