Okta leaders hit with insider-trading class action
A shareholder of cloud-based authenticator Okta has filed a potential class action against the company making a number of accusations about insider trading.
Top executives allegedly traded company shares based on information outsiders did not have, enriching themselves in the process. Their reputed actions cost the company money and damage to Okta‘s reputation.
The case, 1:23-cv-00413-UNA, is being heard in the Delaware U.S. District Court.
Austin Buono claims the executives presented an inaccurate picture of how a merger was going. They spoke publicly about how well integration of Okta sales staff was going with the sales team of Auth0, a competitor that Okta acquired in May 2021, according to court documents.
That was untrue, according to Buono. The two sales teams were not working together, apparently, and were largely untrained on each other’s product lines. Confusion of that kind likely would hurt earnings, and, he claims, some executives began selling shares.
It was not until Aug. 31, 2022, that McKinnon and Tighe said during a financial analysts’ call that integration was not occurring, according to court documents. They said they were rethinking growth plans that had made the merger look like a logical business decision.
Named defendants are CEO Todd McKinnon, Chief Finance Officer Brett Tighe, Chief Operating Officer Frederic Kerrest, board members Shellye Archambeau, Robert L. Dixon, Jr., Patrick Grady, Ben Horowitz, Rebecca Saeger, Michael Stankey, and Michelle Wilson, board chair Jeff Epstein, Chief Accounting Officer Christopher Kramer, President of World Wide Field Operations Susan St. Ledger and Jonathan Runyan.
Runyan, Okta’s longtime general counsel, left the firm March 2, 2023.
Between Sept. 2021 and September 2022, Buono alleges, McKinnon sold 85,649 shares and netted $19.4 million. Kerrest disposed of 54,618 shares for $13.3 million. St. Ledger sold 35,008 shares for about $8 million. Runyan sold 26,756 shares for $6.1 million. Tighe disposed of 15,381 shares for $2.4 million.
Okta has had a tough go of it of late. It was hacked late last year, which, not at all incidentally, comes up in this and other lawsuits.