- Company Name
- Intel Corporation
- Stock Symbol
- Class Period
- July 27, 2017 to January 4, 2018
- Motion Deadline
- March 11, 2018
- Central District of California
The complaint charges Intel and certain of its officers with violations of the Securities Exchange Act of 1934. Intel designs, manufactures and sells computer, networking and communications platforms worldwide. The Company offers microprocessors that process system data and control other devices in the system; chipsets, which send data between the microprocessor and input, display and storage devices, such as the keyboard, mouse, monitor, hard drive or solid-state drive, and optical disc drives; and system-on-chip and multichip packaging products that integrate its central processing units with other system components onto a single chip.
The complaint alleges that throughout the Class Period defendants made false and misleading statements and/or failed to disclose adverse information about Intel’s processor chips, including that the chips contained a design flaw that makes them vulnerable to hacking and that updates to fix the problems in the chips could cause them to operate 5%-30% more slowly. As a result of defendants’ false statements and/or omissions, Intel securities traded at artificially inflated prices during the Class Period, with the price of Intel stock reaching a high of $47.56 per share.
On January 2, 2018, The Register published an article about Intel’s processor chips, which stated that “[a] fundamental design flaw in Intel’s processor chips has forced a significant redesign of the Linux and Windows kernels to defang the chip-level security bug. . . . Crucially, these updates . . . will incur a performance hit on Intel products,” and while the effects were still being evaluated, users were “looking at a ballpark figure of [a] five to 30 per cent slow down.” On January 3, 2018, Intel confirmed its chips contained a feature that makes them vulnerable to hacking. The same day, Reuters reported that the “security flaws . . . could let hackers steal sensitive information from nearly every modern computing device containing chips from Intel.” On this news, the price of Intel shares fell $1.59 per share, or nearly 4%, to close at $45.26 per share on January 3, 2018.
Then, on January 4, 2018, the media reported that Intel’s CEO, Brian M. Krzanich, had sold approximately half of his Intel stock for millions of dollars in proceeds months after Intel was informed about the security flaw in its chips, but before it was disclosed to the public, leaving him with the minimum number of shares he was required to hold. On this news, the price of Intel shares fell another $0.83 per share to close at $44.43 per share on January 4, 2018.