SolarWinds’ shares drop 22 per cent. But what’s this? $286m in stock sales just before hack announced?

VC firms say they weren't aware Orion code had been backdoored


Two Silicon Valley VC firms, Silver Lake and Thoma Bravo, sold hundreds of millions of dollars in SolarWinds shares just days before the software biz emerged at the center of a massive hacking campaign.

Silver Lake and Thoma Bravo deny anything untoward.

The two firms owned 70 per cent of SolarWinds, which produces networking monitoring software that was backdoored by what is thought to be state-sponsored Russian spies. This tainted code was installed by thousands of SolarWinds customers including key departments of the US government that were subsequently hacked via the hidden remote access hole.

News of the role SolarWinds' hijacked Orion software played in the hacking spree emerged at the weekend, and on Monday the developer's share price plummeted more than 20 per cent. It is currently down 22 per cent.

Hacker

SolarWinds: Hey, only as many as 18,000 customers installed backdoored software linked to US govt hacks

READ MORE

However, around a week before, Silver Lake sold $158m of SolarWinds' shares and Thoma Bravo sold $128m, according to the Washington Post. The two outfits have six seats on SolarWinds' board, meaning they will have access to confidential internal information before it is made public. It’s not clear when SolarWinds became aware that its Orion build system had been compromised to include the aforementioned backdoor.

Infosec giant FireEye announced on Tuesday, December 8 that its systems had been hacked and its penetration tools exfiltrated. On Friday, December 11, as part of an investigation into that intrusion, FireEye started letting it be known that SolarWinds' updates had been tampered with. It's not clear how closely linked the network compromises at FireEye and SolarWinds are. However, the Orion maker almost certainly knew about the tampering some time before making its public statements confirming the malicious alterations, and it has been established that the hackers had manipulated the software roughly nine months earlier in the spring to include the backdoor.

We asked FireEye when precisely it told SolarWinds its Orion updates had been trojanized, and a representative told us: “I’m not able to address the timeline of events.”

Timing

There is a plausible explanation for all this: the VCs shed their stock-holdings on the same day SolarWinds' long-standing CEO resigned.

The software house announced in August that Kevin Thompson would leave the company though it didn’t give a date. Thompson reportedly quit on Monday, December 7 – news that was not made public – and a new CEO was formally announced two days later, on December 9, the day after FireEye went public on December 8 with details of the intrusion into its own systems.

In a joint statement supplied to the Washington Post, Silver Lake and Thoma Bravo said the stock sales were a “private placement” with an institutional investor, and that they “were not aware of this potential cyberattack at SolarWinds” before they agreed to the deal.

Investigation

There is almost certain to be an outside, independent probe into what happened, what went wrong, and what can be done to prevent future hacks of this nature. In fact, a group of bipartisan US senators have already written [PDF] to the FBI and Uncle Sam's cybersecurity agency CISA over the “alarming” hack via SolarWinds’ software, and have asked for more information.

If America's securities watchdog, the SEC, launches an investigation in the massive share sales that occurred just days before this became public, we are likely to find out sooner or later what the true timeline was around the network intrusions. For now, however, everyone is remaining tight-lipped. Spokespeople for Silver Lake, Thoma Bravo, and SolarWinds were not available for immediate comment. ®

Broader topics


Other stories you might like

  • New York City rips out last city-owned public payphones
    Y'know, those large cellphones fixed in place that you share with everyone and have to put coins in. Y'know, those metal disks representing...

    New York City this week ripped out its last municipally-owned payphones from Times Square to make room for Wi-Fi kiosks from city infrastructure project LinkNYC.

    "NYC's last free-standing payphones were removed today; they'll be replaced with a Link, boosting accessibility and connectivity across the city," LinkNYC said via Twitter.

    Manhattan Borough President Mark Levine said, "Truly the end of an era but also, hopefully, the start of a new one with more equity in technology access!"

    Continue reading
  • Cheers ransomware hits VMware ESXi systems
    Now we can say extortionware has jumped the shark

    Another ransomware strain is targeting VMware ESXi servers, which have been the focus of extortionists and other miscreants in recent months.

    ESXi, a bare-metal hypervisor used by a broad range of organizations throughout the world, has become the target of such ransomware families as LockBit, Hive, and RansomEXX. The ubiquitous use of the technology, and the size of some companies that use it has made it an efficient way for crooks to infect large numbers of virtualized systems and connected devices and equipment, according to researchers with Trend Micro.

    "ESXi is widely used in enterprise settings for server virtualization," Trend Micro noted in a write-up this week. "It is therefore a popular target for ransomware attacks … Compromising ESXi servers has been a scheme used by some notorious cybercriminal groups because it is a means to swiftly spread the ransomware to many devices."

    Continue reading
  • Twitter founder Dorsey beats hasty retweet from the board
    We'll see you around the Block

    Twitter has officially entered the post-Dorsey age: its founder and two-time CEO's board term expired Wednesday, marking the first time the social media company hasn't had him around in some capacity.

    Jack Dorsey announced his resignation as Twitter chief exec in November 2021, and passed the baton to Parag Agrawal while remaining on the board. Now that board term has ended, and Dorsey has stepped down as expected. Agrawal has taken Dorsey's board seat; Salesforce co-CEO Bret Taylor has assumed the role of Twitter's board chair. 

    In his resignation announcement, Dorsey – who co-founded and is CEO of Block (formerly Square) – said having founders leading the companies they created can be severely limiting for an organization and can serve as a single point of failure. "I believe it's critical a company can stand on its own, free of its founder's influence or direction," Dorsey said. He didn't respond to a request for further comment today. 

    Continue reading
  • Snowflake stock drops as some top customers cut usage
    You might say its valuation is melting away

    IPO darling Snowflake's share price took a beating in an already bearish market for tech stocks after filing weaker than expected financial guidance amid a slowdown in orders from some of its largest customers.

    For its first quarter of fiscal 2023, ended April 30, Snowflake's revenue grew 85 percent year-on-year to $422.4 million. The company made an operating loss of $188.8 million, albeit down from $205.6 million a year ago.

    Although surpassing revenue expectations, the cloud-based data warehousing business saw its valuation tumble 16 percent in extended trading on Wednesday. Its stock price dived from $133 apiece to $117 in after-hours trading, and today is cruising back at $127. That stumble arrived amid a general tech stock sell-off some observers said was overdue.

    Continue reading
  • Amazon investors nuke proposed ethics overhaul and say yes to $212m CEO pay
    Workplace safety, labor organizing, sustainability and, um, wage 'fairness' all struck down in vote

    Amazon CEO Andy Jassy's first shareholder meeting was a rousing success for Amazon leadership and Jassy's bank account. But for activist investors intent on making Amazon more open and transparent, it was nothing short of a disaster.

    While actual voting results haven't been released yet, Amazon general counsel David Zapolsky told Reuters that stock owners voted down fifteen shareholder resolutions addressing topics including workplace safety, labor organizing, sustainability, and pay fairness. Amazon's board recommended voting no on all of the proposals.

    Jassy and the board scored additional victories in the form of shareholder approval for board appointments, executive compensation and a 20-for-1 stock split. Jassy's executive compensation package, which is tied to Amazon stock price and mostly delivered as stock awards over a multi-year period, was $212 million in 2021. 

    Continue reading
  • Confirmed: Broadcom, VMware agree to $61b merger
    Unless anyone out there can make a better offer. Oh, Elon?

    Broadcom has confirmed it intends to acquire VMware in a deal that looks set to be worth $61 billion, if it goes ahead: the agreement provides for a “go-shop” provision under which the virtualization giant may solicit alternative offers.

    Rumors of the proposed merger emerged earlier this week, amid much speculation, but neither of the companies was prepared to comment on the deal before today, when it was disclosed that the boards of directors of both organizations have unanimously approved the agreement.

    Michael Dell and Silver Lake investors, which own just over half of the outstanding shares in VMware between both, have apparently signed support agreements to vote in favor of the transaction, so long as the VMware board continues to recommend the proposed transaction with chip designer Broadcom.

    Continue reading

Biting the hand that feeds IT © 1998–2022