SolarWinds reaches $26m settlement with shareholders, expects SEC action

SolarWinds has agreed to pay $26 million to settle a shareholder lawsuit, and it's also expecting to be slapped with an enforcement action by Uncle Sam – both related to its infamous 2020 supply chain security fiasco, according to the software maker's most recent US regulatory filing. At the end of October, SolarWinds reached …

[sgj100]

I don't understand the logic of shareholders suing the company they own. Surely the $26m already belongs to the shareholders as owners of the company. It would only make sense if the $26m was paid by the company executives (and that's never going to happen!)

[Anonymous Coward]

I think they don’t care about the company (I wouldn’t). Just that they lost money and want at least some of it back. Apparently the law determined the company was negligent and responsible/liable for shareholder losses.

[katrinab]

Yes, but the money comes from the company's assets, which are the shareholder's assets. It is like suing your own bank account, and getting a payout from it, when you could do it a lot cheaper by just going to the bank counter and withdrawing the money.

[Snowy]

Unless they have insurance cover for this in which case the insurance would pay it?

A quick search would indicate yes you can buy insurance to cover "Inaccurate or inadequate disclosure"

https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/d-o-insurance-explained.html#:

[Kernel]

Facepalm

Yes, but the money comes from the company's assets, which are the shareholder's assets."

Only if you still own the shares - otherwise you got back at least part of your investment cost when you sold the shares and the settlement will help pay for any losses you may have suffered over the breach.

[katrinab]

If you sell the shares, the price will be depressed by the expected cost of the settlement.

[Anonymous Coward]

Not if their chunk of settlement is bigger than their chuck of holdings.

If they can make a chunk of money in the short run, and push the stock down in the settlement, then if they think it will recover, reinvest in the company when the stocks down. Or they just sold on the way down, and take the cash and walk for other investments. And that is without factoring a petty ego into things.

Welcome to the jungle. Count your fingers after shaking hands.

[dgeb]

It's likely that not all the shareholders will receive anything from the settlement - the major ones with control of board seats are unlikely to have a case. So it isn't just an enforced dividend, it's a net transfer from the owners who should have known the risk to those allegedly misled about it.

[Spazturtle]

The executives are required to hold executive liability insurance (something Musk has gotten in trouble for not holding in the past), lawsuits like this are paid out by the executive's insurance not the company.

[Sparkus]

and yet....

The three executives (whose names are known) that are responsible for a series of decisions and cost-cutting that led to this debacle will not be held accountable.

[Snowy]

Re: and yet....

They buy insurance and they are then not held accountable.

[Nightkiller]

Re: and yet....

Waiting to see if these were part of the shareholders who sued.

[PTCruiserGT]

I'm not sure what's worse. This news or the fact that there are people out there still using Solarwinds products.

[chivo243]

my last gig used SolarWinds WebHelpDesk... or at least the IT office used it, users rarely submitted tickets.