SolarWinds Has ‘Exhausted’ All Insurance Coverage Defending vs. SEC’s Suit: 10-K

SolarWinds disputes allegations in the SEC’s Oct. 30 complaint that the company duped investors by concealing the security vulnerabilities that led to the Russian government’s massive Sunburst cyberattack in 2020 (see 2310310041) “and intends to defend itself in this matter,” said the company’s 10-K filing Friday with the SEC. Though the complaint's impact, including the costs, timing and results, are “unknown at this time,” an “adverse resolution” of the litigation “could have a material impact” on the company’s business, reputation and financial condition, it said. Regardless of the outcome of the SEC complaint, the SEC’s investigation and resulting complaint has resulted in substantial costs and “diversion of the attention of management and other employees,” it said. “We have incurred and will continue to incur legal and other expenses in connection with this matter and anticipate that we will be required to indemnify certain current and former officers,” said the 10-K. “We have exhausted our coverage limits under our applicable insurance policies and will therefore be required to cover such costs without insurance reimbursement,” it said.