Hampton v. Root9B Technologies
Root9B is a company providing cybersecurity products and services. The plaintiff, David Hampton, alleged that two misleading statements were released by root9B after they were bought by a larger company. He filed securities-fraud claims in a class-action lawsuit.
First, a letter was issued from the CEO and chairman of root9B, Joseph Grano Jr. It stated that root9B had proprietary hardware and software designed for new methods used by hackers. After that, root9B raised $11.5 million with three stock and option offerings.
Second, a press release came from root9B stating it had discovered and thwarted a planned hack by state-sponsored Russian hackers.
A reporter named Brian Krebs claimed there was little evidence that the Russian team in question was actually the ones behind the planned attack. This article and another are blamed by Hampton to cause root9B’s stock to drop from $2.51 a share to $1.02 by the end of the ordeal.
The district court granted the defendants’ motion to dismiss all claims. The court agrees with the district court in that root9B’s claims to proprietary hardware were not disproven through one of the articles and omission of language from filings with the SEC. The court also agrees with the district court in that Hampton failed to show the attribution to a Russian hacking team was false or misleading.