- Company Name
- Chegg, Inc.
- Stock Symbol
- Class Period
- July 30, 2018 to September 25, 2018
- Motion Deadline
- November 26, 2018
- Northern District of California
The complaint charges Chegg and its Chief Executive Officer with violations of the Securities Exchange Act of 1934. Chegg is a direct-to-student learning platform that provides educational material and services to high school and college students.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse information regarding the Company’s business, operations and prospects. Specifically, defendants failed to disclose that the Company lacked adequate security measures to protect its user data, that the Company lacked the internal controls and procedures to detect unauthorized access to its systems and its user data, and that, as a consequence, the Company would incur additional expenses and litigation risks if the security of its user data was compromised. As a result of defendants’ false statements and/or omissions, Chegg securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $32 per share.
Then, on September 25, 2018, Chegg reported that it had “learned that on or around April 29, 2018, an unauthorized party gained access to a Company database that hosts user data for chegg.com and certain of the Company’s family of brands such as EasyBib.” The Company reported that approximately 40 million users’ data, including usernames, email addresses, shipping addresses, and hashed passwords, could have been obtained and that an investigation into the incident was ongoing. On this news, the price of Chegg shares fell $3.91 per share, over 12%, to close at $28.42 per share on September 26, 2018.