Jessy Edwards  |  May 20, 2021

Category: Legal News

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Wireless networking company Ubiquiti downplayed a major data breach and when the truth became public, its stock plummeted, a new nationwide class action lawsuit alleges.

Plaintiff Nils Mölder filed the class action lawsuit against Ubiquiti Inc. in a New York federal court Wednesday. In it, he alleges the company — which develops tech platforms for high-capacity Internet access and consumer electronics — violated the Securities Exchange Act of 1934 through making false and misleading statements about its business.

He seeks to represent anyone who bought Ubiquiti securities between Jan. 11, 2021 and March 30, 2021.

In the class action, Mölder notes that on March 30 this year, after the market closed, online journalist Chris Krebs published an article entitled “Whistleblower: Ubiquiti Breach ‘Catastrophic’” saying the company had downplayed a data breach from January.

On this news, Ubiquiti’s stock price plummeted $50.70, or 14.5 percent, to close at $298.30 per share.

Mölder alleges that from January to March this year, the company failed to disclose material adverse facts about its business, operations, and prospects. 

He said the company didn’t tell investors it had played down the data breach, that attackers had obtained administrative access to Ubiquiti’s servers and all databases, credentials, and secrets required to forge single sign-on cookies. 

It also did not tell investors that, as a result, intruders already had credentials needed to remotely access Ubiquiti’s customers’ systems.

“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” Mölder says.

He’s seeking certification of the class action, damages, fees, costs and a jury trial.

Meanwhile, a number of tech companies are facing class action under the Securities Exchange Act right now. On Tuesday, global mobile ecommerce company ContextLogic was accused of artificially inflated its stock price ahead of its initial public offering (IPO) in December last year, hurting investors when stock prices plummeted, that new class action lawsuit alleges.

Did you lose money on Ubiquiti securities when the stock price dropped? Let us know in the comments! 

The plaintiff is represented by Gregory B. Linkh, Robert V. Prongay, Charles H. Linehan and Pavithra Rajesh of Glancy Prongay & Murray LLP.

The Ubiquiti Securities Exchange Act Class Action Lawsuit is Mölder v. Ubiquiti Inc., Case No. 1:21-cv-04520, in the U.S. District Court Southern District of New York.

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