Pomerantz LLP announces that a class action lawsuit has been filed against Intel Corporation (“Intel” or the “Company”) and certain of its officers. The class action, filed in United States District Court, for the Northern District of California, and docketed under 18-cv-00507, is on behalf of a class consisting of investors who purchased or otherwise acquired Intel securities, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
Intel Corporation designs, manufactures, and sells computer components and related products. The Company’s major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory, graphic, network and communication, systems management software, conferencing, and digital imaging products.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) a fundamental security flaw in Intel’s processor chips renders them susceptible to hacking; (ii) software updates to fix the problems in Intel’s processor chips could cause Intel chips to operate 5-30 percent more slowly; and (iii) as a result, Intel’s public statements were materially false and misleading at all relevant times.
On January 2, 2018, post-market, news outlets reported that a significant design flaw in Intel’s processor chips could allow malicious software to read protected areas of a device’s kernel memory—i.e., memory dedicated to the most essential core components of an operating system and their interactions with system hardware—potentially exposing protected information, such as passwords. The online publication The Register reported that the operating system updates necessary to address the vulnerability would likely result in “a ballpark figure of five to 30 percent slow down, depending on the task and the processor model,” for Intel-based computing devices.
On January 3, 2018, media outlets further reported that Google Project Zero’s security team had discovered serious security flaws affecting computer processors built by Intel and other chipmakers. In a blog post, the Project Zero team stated that security flaws—dubbed “Meltdown” and “Spectre”—allows third parties to gather passwords and other sensitive data from a system’s memory.
On that same day, Intel published an article on its website entitled “Intel Responds to Security Research Findings,” confirming that its chips contain a feature that makes them vulnerable to hacking.
Following these disclosures, Intel’s share price fell $1.59, or over 3.5%, to close at $45.26 per share on January 3, 2018.
On January 4, 2018, several news outlets reported that Intel’s CEO, Defendant Krzanich, sold off $24 million worth of Intel stock and options in late November after Intel was informed of vulnerabilities in its semiconductors, but before it was publicly disclosed. Defendant Krzanich sold roughly half his stock and options months after he learned about critical flaws in billions of Intel’s microchips, but before it was publicly disclosed, and now holds only the minimum number of shares he is required to own.
Following this news, Intel’s share price fell $0.83, or 1.83%, to close at $44.43 per share on January 4, 2018, damaging investors.