New York City District Council of Carpenters Pension Fund v. SolarWinds Corporation

This is a securities fraud class action brought on behalf of persons and entities who purchased or otherwise acquired the common stock of SolarWinds Corporation (“SolarWinds” or the “Company) from October 18, 2018 through December 17, 2020, inclusive (the “Class Period”), and were damaged thereby.

Lead Plaintiff Has Reached a Proposed Settlement of the Action for $26 Million

Lead Plaintiff New York City District Council of Carpenters Pension Fund , on behalf of itself and the Settlement Class, has reached a proposed settlement of the Action for $26,000,000 in cash that, if approved, will resolve the Action (the “Settlement”).

If you are a member of the Settlement Class, your rights will be affected and you may be eligible for a payment from the Settlement.  The Settlement Class consists of:

all persons who purchased or otherwise acquired the common stock of SolarWinds from October 18, 2018 through December 17, 2020, inclusive (the “Class Period”), and who were damaged thereby.

Certain persons and entities are excluded from the Settlement Class by definition (see paragraph 25 of the Notice) or may request exclusion pursuant to the instructions set forth in the Notice (see paragraphs 55 to 58 of the Notice).

Please read the Notice to fully understand your rights and options.  Copies of the Notice and Claim Form can be found in the Case Documents list on the right of this page. You may also visit the case website, SolarWindsSecuritiesLitigation.com, for more information about the Settlement.

To be eligible to receive a payment under the proposed Settlement, you must submit a Claim Form postmarked (if mailed) or submitted on-line by no later than July 7, 2023.

Payments to eligible claimants will be made only if the Court approves the Settlement and a plan of allocation, and only after any appeals are resolved, and after the completion of all claims processing.  Please be patient, as this process will take some time to complete.

IMPORTANT DATES AND DEADLINES

July 7, 2023	Claim Filing Deadline. Claim Forms must be postmarked (if mailed) or submitted on-line no later than July 7, 2023.
July 7, 2023	Exclusion Deadline. To exclude yourself from the Settlement Class, you must submit a written request for exclusion so that it is received no later than July 7, 2023, in accordance with the instructions in the Notice.
July 7, 2023	Objection Deadline. Any objections to the proposed Settlement, the proposed Plan of Allocation, or the motion for attorneys’ fees and expenses, must be submitted or filed so they are received no later than July 7, 2023, in accordance with the instructions in the Notice.
July 28, 2023 at 2:00 p.m. Central Time	Settlement Fairness Hearing.  The Settlement Fairness Hearing will be held July 28, 2023 at 2:00 p.m. Central Time, before the Honorable Robert Pitman, at the United States District Court for the Western District of Texas, Courtroom 4 of the United States Courthouse, 501 West Fifth Street, Austin, Texas 78701.  The Settlement Fairness Hearing will be held by the Court to consider, among other things, whether the proposed Settlement is fair, reasonable, and adequate and should be approved; whether the proposed Plan of Allocation is fair and reasonable and should be approved; and whether Lead Counsel’s motion for attorneys’ fees and expenses should be approved.

 

Background and History of the Litigation

Based in Austin, Texas, SolarWinds provides software products used to monitor the health and performance of information technology networks. The Company’s flagship product is its Orion platform, which provides a suite of software tools widely used by government agencies and Fortune 500 companies to monitor their networks.

From October 18, 2018 to December 17, 2020 (the “Class Period”), SolarWinds touted its robust security controls and commitment to prioritizing customers’ security. Lead Plaintiff alleges that in reality, however, the Company failed to employ adequate cybersecurity safeguards and did not maintain effective monitoring systems to detect and neutralize security breaches, prioritizing short-term profits while cutting security costs, and that as a result of vulnerabilities in the Company’s cybersecurity protections, SolarWinds and its customers were particularly susceptible to cyber-attacks. Lead Plaintiff alleges that these misrepresentations caused shares of SolarWinds stock to trade at artificially inflated prices during the Class Period.

The truth began to be revealed on December 13, 2020, when Reuters reported that hackers had infiltrated the networks of the U.S. Treasury and Commerce departments and had been spying on the agencies’ internal email communications. The report further revealed that the hackers had gained access to the networks by tampering with software updates released by SolarWinds.

The next day, SolarWinds disclosed that hackers had breached its network and inserted malware into its Orion monitoring products, which existed in software updates released to SolarWinds customers between March and June 2020. The Company further revealed that the networks of as many as 18,000 customers may have been compromised by the malicious Orion updates.

On December 15, 2020, Reuters reported that, in 2019, a security researcher had warned SolarWinds that anyone could access the Company’s update server by simply using the password “solarwinds123.” Thus, the SolarWinds breach “could have been done by any attacker, easily.” Another cybersecurity expert observed that the Orion updates that contained the malicious code were still available for download days after the Company realized its software had been compromised.

Then, on December 17, 2020, Bloomberg News reported that the networks of at least three state governments were compromised as a result of the SolarWinds security breach. In addition, it was reported that the hackers used the SolarWinds intrusion to penetrate government networks that implicated national security concerns, including the U.S. Department of Energy and its National Nuclear Security Administration, which maintains the country’s arsenal of nuclear weapons. Lead Plaintiff alleges that these disclosures caused a precipitous decline in the price of SolarWinds shares, erasing over $620 million in shareholder value.

On February 9, 2021, the New York City District Council of Carpenters Pension Fund (“Lead Plaintiff”), represented by BLB&G, filed a securities class action against SolarWinds, certain of its current and former senior executives, and certain private equity companies that controlled SolarWinds during the Class Period. On June 1, 2021, Lead Plaintiff filed the Consolidated Complaint. Defendants moved to dismiss the Consolidated Complaint on August 2, 2021. On March 30, 2022, the Honorable Robert Pitman denied Defendants’ motions to dismiss in large part, and sustained nearly all of the Complaint.

Discovery in the Action commenced in May 2022. Defendants produced more than 125,000 documents, totaling more than 600,000 pages, to Lead Plaintiff. In addition, the Parties met and conferred and exchanged numerous letters concerning disputed discovery issues over several months.

On September 30, 2022, Lead Plaintiff filed its motion for class certification and appointment of class representative and class counsel, which was accompanied by a report from Lead Plaintiff’s expert on market efficiency and common damages methodologies. The motion for class certification was pending when the Parties reached their agreement to settle.

The Parties engaged in mediation on October 26, 2022, which resulted in an agreement in principle to settle in the Action in return for a cash payment of $26,000,000 for the benefit of the Settlement Class, subject to the Court’s approval.  On November 28, 2022, the Parties entered into the Stipulation and Agreement of Settlement, which sets forth the terms and conditions of the Settlement.

On February 8, 2023, the Court preliminarily approved the Settlement, authorized Notice to be sent to potential Settlement Class Members, and scheduled the Settlement Fairness Hearing to consider whether to grant final approval to the Settlement for July 28, 2023.