NY Pension Fund Invests $75M in CrowdStrike Before Share Drop

The New York State Teachers’ Retirement System (NYSTRS) is grappling with nearly $30 million in losses following its investment in CrowdStrike, a cybersecurity firm that recently experienced a significant operational crisis. NYSTRS acquired 197,462 shares of CrowdStrike in the second quarter of 2023, valued at over $75 million as of June 30. However, a 38% drop in the company's stock price after a global network failure on July 19 has reduced the stake's value to approximately $46 million, resulting in a paper loss of $28.5 million. Despite the downturn, NYSTRS reported a total portfolio return of 9% for the fiscal year ending June 30, 2023, exceeding its legally mandated annual return of 6.95%. A spokesperson for the pension fund declined to comment on specific stock holdings, emphasizing the fund's broader investment strategy. The network disruption caused by CrowdStrike's software issues led to widespread operational failures, including grounded flights and banking system outages. In response to the incident, shareholders have initiated a class-action lawsuit against CrowdStrike, alleging that the company made "false and misleading" statements regarding its software testing protocols. The lawsuit, filed in federal court in Austin, Texas, accuses CrowdStrike executives of misleading investors about the reliability of their software updates. CrowdStrike has denied these allegations and stated its commitment to defending against the lawsuits, asserting that it provided extensive technical support to Delta Airlines during the crisis. Delta Airlines, which reported losses of at least $500 million due to the disruption, is also facing legal action from affected passengers and a separate investigation by the Department of Transportation.