SolarWinds Directors Under Investigation for Insider Trading Relating to Cybersecurity Breach
Schubert Jonckheer & Kolbe LLP is investigating potential derivative claims on behalf of shareholders of SolarWinds Corporation (NYSE: SWI) relating to the sale of $286 million of SolarWinds stock by director-affiliated entities ahead of the company’s recent announcement of a major cybersecurity breach.
On December 14, 2020, SolarWinds confirmed publicly that its Orion software product was the target of a highly sophisticated, months-long security breach which affected the computer systems of numerous U.S. government agencies and major corporations, including the preeminent cybersecurity firm FireEye, among others. Predictably, SolarWinds’ stock price plummeted nearly 40% in response to the news. However, on December 7, 2020, just days prior to the announcement, major investors affiliated with SolarWinds’ board of directors unloaded a whopping $286 million of their company holdings.
These suspicious trades may even attract the attention of regulators, including the SEC. In an article published in The Washington Post on December 15, 2020, a former senior counsel for the SEC’s Division of Enforcement said that “of course” the SEC would investigate the SolarWinds trades, adding, “Large trades in advance of a major announcement, then an announcement: That is a formula for an insider trading investigation.” Additionally, there is at least one class action lawsuit on file in the Western District of Texas alleging that the company issued false and misleading statements in connection with the security of its Orion software product.
The Schubert Firm is investigating potential breaches of fiduciary duty by the company’s directors and affiliated entities for selling or aiding the selling of SolarWinds stock while potentially in possession of material non-public information concerning the security breach.
If you currently own stock in SolarWinds and wish to obtain additional information—or would like to participate in a potential shareholder derivative action—please complete the form below for a free legal consultation.
