Snowflake Faces Securities Fraud Lawsuit
A class-action lawsuit has been filed against data-warehousing company Snowflake Inc. for alleged violations of federal securities law. The Schall Law Firm is reminding investors of the suit, which pertains to sections of the Securities Exchange Act. The specific allegations were not detailed in the announcement.
The lawsuit alleges Snowflake made misleading statements about customer demand and revenue, failing to disclose that new product efficiencies and pricing structures were expected to negatively impact consumption. This class-action suit covers investors who purchased Snowflake securities between June 27, 2023, and February 28, 2024. On February 28, 2024, the company disclosed it was forecasting revenue headwinds due to these efficiencies and pricing models. Following this announcement, Snowflake's Class A common stock fell over 18%, prompting the lawsuit. The lead plaintiff motion deadline for investors is April 27, 2026. This legal challenge is separate from the multidistrict litigation Snowflake faces over a 2024 data breach. That incident compromised the data of over 500 million individuals by affecting Snowflake clients such as Ticketmaster, AT&T, and Advance Auto Parts. Allegations in the data breach litigation claim Snowflake failed to implement adequate data security measures and did not provide timely notice of the breach. The company is accused of lax security practices, such as not requiring multi-factor authentication for all sensitive accounts. In the wake of these events, Director Frank Slootman sold 100,000 shares of Snowflake stock on February 18, 2026, for a total of $17.69 million. This transaction represented a 66.52% decrease in his ownership of the company's stock.
