Firms file suit against both CPU manufacturers in the wake of disclosed vulnerabilities; AMD are hit by two, whilst Intel have four firms gunning against them.
Firms file suit against both CPU manufacturers in the wake of disclosed vulnerabilities; AMD are hit by two, whilst Intel have four firms gunning against them.
In the wake of Google Project Zero’s disclosure of Meltdown and Spectre CPU vulnerabilities earlier this month, both Intel and AMD have now been hit with speculative class action lawsuits addressing the extent to which companies knew about the vulnerabilities and whether they followed proper investor disclosure processes. The lawsuits are being filed on behalf of investors in Intel and AMD securities who may have been financially harmed by the drop in share price in the immediate aftermath of comprehensive disclosures this month.
Four law firms have issued press releases to announce the filing of class action lawsuits against Intel. The wording of their allegations are all near identical, and in summary amount to:
The complaint alleges that throughout the class period the defendant (Intel) issued materially false and/or misleading statements and/or failed to disclose that:
– (1) there is a fundamental design flaw in Intel’s processor chips as they contain a feature that makes them vulnerable to hacking (i.e. the Meltdown vulnerability);
– (2) updates to fix the problems in Intel’s processor chips could cause Intel chips to operate 5-30 percent more slowly; and
– (3) consequently, Intel’s public statements were materially false and misleading at all relevant times.
– (1) there is a fundamental design flaw in Intel’s processor chips as they contain a feature that makes them vulnerable to hacking (i.e. the Meltdown vulnerability);
– (2) updates to fix the problems in Intel’s processor chips could cause Intel chips to operate 5-30 percent more slowly; and
– (3) consequently, Intel’s public statements were materially false and misleading at all relevant times.
It is notable that each make mention of a class period from July 2017 through to January 2018, broadly coinciding with the time between Google’s Project Zero team uncovering Meltdown and Spectre vulnerabilities (notifying Intel, AMD & ARM in the process) and the publication of The Register’s article disclosing the vulnerabilities. Two also specifically highlight the Intel CEO’s exercising of stock options and share sales in the amount of $39million during this period.
Allegations against AMD by the two remaining law firms are more subtle. To summarise:
The defendant (AMD) during the Class Period made materially false and/or misleading statements and/or failed to disclose that:
– (1) a fundamental security flaw in Advanced Micro’s processor chips renders them susceptible to hacking; and
– (2) as a result, Advanced Micro’s public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
– (1) a fundamental security flaw in Advanced Micro’s processor chips renders them susceptible to hacking; and
– (2) as a result, Advanced Micro’s public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
The allegations hinge on preliminary statements made to investors on January 3rd – i.e. that “a spokesperson for AMD advised investors that while its own chips were vulnerable to one variant of Spectre, there was “near zero risk” that AMD chips were vulnerable to the second Spectre variant.” – which is incompatible with the later follow-up statement that ‘AMD CPUs were vulnerable to both variants of Spectre’.
On the face of it the suits against AMD appear to be on very shaky ground. They assume a statement of ‘near zero risk’ to AMD’s CPUs from a Spectre variant to be the same as ‘not vulnerable to’ that variant, which is clearly not the case. Read Rosen Legal’s complaint against AMD.
The Intel lawsuits meanwhile could have fascinating ramifications. They strike at the heart of a system of NDAs used in the industry which allow manufacturers to asses and patch out vulnerabilities before they have a chance to escape ‘into the wild’, a process critical to protecting consumers. The lawsuit’s arguments appear to be that the market should be notified of vulnerabilities immediately despite the risk, and investors should be compensated should patches result in performance degradation.
Now that the suits have been filed prominent members of the class have until mid-March to identify themselves as lead plaintiffs or members of the class. One’s eligibility to share in any recovery awarded isn’t contingent on this.
SOURCES: Rosen Law Firm PR vs AMD, Pomerantz Law Firm vs AMD PR, Brower Pivel vs Intel PR, Levi Korsinsky LLP vs Intel, Kessler Topax Meltzer Check LLP vs Intel PR, Bronstein Gewirtz Grossman LLC vs Intel PR, Rosen Legals Complaint against AMD.
