FireEye close to settling lawsuit
Nice chunk of change
FireEye is close to paying $10.3m to settle a class-action lawsuit alleging that the security firm misled investors about the effectiveness of its security technology.
Santa Clara Superior Court Judge Peter Kirwan said he was minded to approve the negotiated settlement once details such as proposed attorneys' fees and procedures for litigants to opt out had been resolved.
The dispute dates back to 2014, when FireEye shareholders launched multiple class action lawsuits against FireEye's executives and investment banks related to FireEye's second public offering. The complainants alleged the execs had made misleading statements about the effectiveness of its technologies, which they claim caused the stock to spike before a sustained drop.
FireEye first went public in September 2013, opening at $20 per share. A further 14 million shares were released in a second tranche in March 2014, pricing FireEye at $82 per share.
A Bloomberg report claimed that FireEye's corporate clients, including retail giant Target, were disabling its software. Target subsequently claimed that this weakness was a contributory factor in a high profile 2013 hack attack.
FireEye's stock fell sharply in the months after its second IPO, reaching $28 per share by May 2014. This fall prompted disgruntled investors to call in their lawyers. FireEye and parties to the class action lawsuit presented a draft settlement to the case last Friday that involved a payment by $10.25m by FireEye, of which lawyers would take $3.41 million in fees.
If confirmed, the case would represent the second-largest recovery ever achieved in a case brought in California state court under the Securities Act of 1933, law360.com (registration required) notes. The case is scheduled to return to court on 9 June.
Last November a California federal judge dismissed a separate lawsuit by other disgruntled FireEye investors irked that FireEye didn't adequately warn them about a change in its business model.
El Reg approached FireEye for comment. It declined to say anything about the latest ongoing case, instead offering comment on last year's case, which was settled in the vendor's favour. ®
The case is In re. FireEye, Inc. Securities Litigation, case number 2014-1-CV-266866, in the Superior Court of the State of California, County of Santa Clara.