SAN FRANCISCO (Legal Newsline) - Labaton Sucharow will lead shareholder litigation against a cybersecurity company that suffered a stock drop in 2022 thanks to a hacking incident.
While Okta has called the case "meritless," U.S. District Judge Susan Illston on Feb. 5 granted Labaton's motion to be made lead counsel. The case is pending in U.S. District Court for the Northern District of California.
In approving a motion for class certification, Illston also made the Nebraska Investment Council and North Carolina Retirement Systems the lead plaintiffs.
Litigation started in May 2022. The complaint says the company had inadequate safety measures during the class period, which led to hackers known as LAPSUS$ posting screenshots of Okta's internal company environment.
The company on March 22, 2022, declared 2.5% of customers had potentially been impacted. News coverage noted the company had more than 15,000 customers at the time.
Raymond James downgraded the company from "strong buy" to "market perform," citing concerns over the security incident. Its stock price fell $17.88 per share - nearly 11% - to $148.55 after the downgrade.
Okta said it promptly reported everything it knew about the cyberattack, but litigants "reflexively" sued despite the company claiming the incident had no impact on its financial state.
"Although its themes are well worn, Plaintiff faced particularly unfavorable facts because the security incident at the heart of this case never even breached Okta's or its customers' systems, caused minimal harm, and was broadly disclosed soon after Okta learned about it," a motion to dismiss says.