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SolarWinds denies insider trading activity ahead of hack revelation

18 December 2020
 Dan Ackermann

SolarWinds is at the heart of what might be the most significant cybersecurity breach in U.S. history, as hackers used an exploit in its system to possibly access everything from the National Nuclear Security Administration to most of the U.S. Fortune 500.

What's new: The IT vendor is (belatedly) pushing back against suggestions that its two largest investors engaged in insider trading ahead of the hack revelations.

The history: Texas-based SolarWinds was taken private in 2016 for $4.5 billion by private equity firms Silver Lake and Thoma Bravo. It then completed an IPO in October 2018.

  • In August 2020 SolarWinds announced plans to hire a new CEO.
  • On Dec. 7, Silver Lake and Thoma Bravo sold around $315 million in SolarWinds stock to Canada Pension Plan Investment Board (CPPIB). The two firms retained equity positions and seats on the SolarWinds board of directors.
  • On Dec. 8, U.S. cybersecurity company FireEye disclosed that it had been hacked, likely by a government.
  • On Dec. 9, SolarWinds named its new CEO.
  • On Dec. 14 came reports that both the U.S. Treasury and Commerce Departments had been hacked, with FireEye publicly identifying SolarWinds for the first time.
  • SolarWinds on Dec. 14 acknowledged it "has been made aware" of the hack, but declined to say when. One day later, the Washington Post published a story questioning the stock sales.

All of which leads us to yesterday, when SolarWinds put more details on its calendar.

  • Per an 8-K filing, SolarWinds says its CEO was first informed of the situation, by FireEye, on Dec. 12.
  • SolarWinds doesn't say when the board, including Silver Lake and Thoma Bravo reps, were informed, but the implication is that it couldn't have been before the 12th. If so, the trades were clean and CPPIB simply has a case of awful luck, as SolarWinds stock is down 26% on the week.

In a statement, the private equity firms said: “Thoma Bravo and Silver Lake were not aware of this potential cyberattack at SolarWinds prior to entering into a private placement to a single institutional investor on 12/7.”

  • A CPPIB spokesman declined to comment on if the system was aware of SolarWinds' CEO hire when closing its purchase.

The bottom line: Expect U.S. securities regulators to trust but verify.

Go deeper:Cyberhack looks like an act of war

Transcripts show George Floyd told police "I can't breathe" over 20 times

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Newly released transcripts of bodycam footage from the Minneapolis Police Department show that George Floyd told officers he could not breathe more than 20 times in the moments leading up to his death.

Why it matters: Floyd's killing sparked a national wave of Black Lives Matter protests and an ongoing reckoning over systemic racism in the United States. The transcripts "offer one the most thorough and dramatic accounts" before Floyd's death, The New York Times writes.

The state of play: The transcripts were released as former officer Thomas Lane seeks to have the charges that he aided in Floyd's death thrown out in court, per the Times. He is one of four officers who have been charged.

  • The filings also include a 60-page transcript of an interview with Lane. He said he "felt maybe that something was going on" when asked if he believed that Floyd was having a medical emergency at the time.

What the transcripts say:

  • Floyd told the officers he was claustrophobic as they tried to get him into the squad car.
  • The transcripts also show Floyd saying, "Momma, I love you. Tell my kids I love them. I'm dead."
  • Former officer Derek Chauvin, who had his knee on Floyd's neck for over eight minutes, told Floyd, "Then stop talking, stop yelling, it takes a heck of a lot of oxygen to talk."

Read the transcripts via DocumentCloud.