NEW YORK, Jan. 29, 2024 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, is investigating potential claims against Okta, Inc. (NASDAQ: OKTA) on behalf of long-term stockholders following a class action complaint that was filed against Okta on December 13, 2022 with a Class Period from March 5, 2021 to Match 22, 2022. Our investigation concerns whether the board of directors of Okta have breached their fiduciary duties to the company.
Okta is an identity and access management company which provides cloud software to aid companies in managing and securing user authentication over multiple applications.
To expand its customers’ choices, in March 2021, the Company acquired Auth0, an identity platform geared to addressing application developers’ needs, in a transaction valued at $6.5 billion. Financial analysts questioned whether Okta was paying too much for the company and were concerned about the integration process.
The Company and several of the Individual Defendants repeatedly issued statements reassuring investors that the two companies were integrating seamlessly, and that the Company was increasing sales volume for Okta and Auth0 products. However, in reality, a large number of Auth0 and Okta employees resigned due to mismanagement and a failed integration plan. The upheaval affected sales of Okta and Auth0 products due to a fundamental lack of training and proper management.
The upheaval in the wake of the Auth0 acquisition ultimately led to a substantial breach of trust between Okta and its customers that threatens its business prospects. Central to Okta’s growth and success is data security and maintaining customers’ trust. Despite knowing the importance of maintaining this trust, the Individual Defendants failed to implement internal controls over data security. The result of this inattention was inevitable and, in January 2022, hackers accessed Okta’s servers through an unsecured administrative tool. Further jeopardizing the trust of its customers, the Company failed to report the breach and the public learned of the data breach from the hackers themselves when they posted screenshots of Okta’s internal systems in March 2022.
After the hackers revealed their breach of Okta’s systems, the Company was forced to admit that it detected the breach in January but failed to report it for two months. Analysts downgraded the Company’s stock based on the breach of customer trust and failed data security and the Company’s stock dropped 11% in one day. Ultimately, the Company admitted to making a “mistake” by concealing the breach.
In the wake of these damaging events, a securities class action was filed by aggrieved investors against the Company, its Chief Executive Officer (“CEO”), Defendant Todd McKinnon (“McKinnon”), and other Okta officers. As such, the Company is now subject to substantial liability and will be forced to expend substantial sums to defend itself and its officers.
Confidential witnesses in the securities class action revealed the extent of the problems integrating Auth0 with Okta and provided further details about the fundamental lack of data security at Okta, which resulted in multiple security breaches in the years prior to the January 2022 breach. Despite the red flags, the Individual Defendants failed to implement and monitor internal controls over the integration process and data security at the Company.
In August 2022, the Company finally disclosed the integration problems which were causing “confusion in the field, which impacted Okta’s “business momentum.” The Company reported that it was lowering its calculated billings outlook for the year by $140 million and a $4 billion revenue target set for 2026, despite recently confirming the Company’s ability to meet the revenue target.
As a result of the Individual Defendants’ breaches of fiduciary duty and other misconduct, Okta has sustained substantial damages and irreparable injury to its reputation. Through this action, Plaintiff seeks to recover the damages for the Company and remediate the internal control weaknesses that afflict Okta.
If you are a long-term stockholder of Okta, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York and California. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Melissa Fortunato, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com
