CrowdStrike Under Federal Scrutiny for Controversial Deal

Published 8 hours agoCRWD

CrowdStrike Under Federal Scrutiny for Controversial Deal

CrowdStrike Holdings Inc. is facing an investigation by the U.S. Department of Justice and the Securities and Exchange Commission over a $32 million deal with Carahsoft Technology Corp. The deal was meant to supply cybersecurity tools to the IRS, although the IRS did not end up purchasing the products. Bloomberg Law reported that this issue has caught the attention of federal authorities.

The investigation is particularly focused on the timing of the transaction, which was completed on the last day of a fiscal quarter in 2023. This timing has raised concerns about how CrowdStrike recognized the revenue, leading to further scrutiny. According to Computerworld, the timing could suggest potential issues with revenue recognition policies, a critical aspect for publicly traded companies.

Despite the ongoing investigation, CrowdStrike has publicly stated it stands by its accounting practices for the deal with Carahsoft and is cooperating with the authorities. Meanwhile, the company’s stock has been feeling the pressure, recently trading at $410.32, a drop of $18.31 from the previous close, as the market reacts to the unfolding situation. CrowdStrike urged investors to stay informed, indicating the investigation's outcome could carry significant weight for the firm.

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