Okta Securities Litigation

Okta provides identity and access management (“IAM”) software that helps companies secure user authentication in applications, and developers build identity controls within applications, web services, and devices. Okta primarily markets the Okta Identity Cloud as a one-stop solution that provides data security for an organization’s workforce. As alleged in the Complaint, as a data security company, Okta protects its customers from security breaches and maintaining customers’ trust was critical to Okta’s success. In May 2021, Okta acquired Auth0, Inc. (“Auth0”) in an attempt to sustain its high rate of growth. Auth0 provided customer identity and access management (“CIAM”) software, as opposed to the IAM software that Okta primarily provided for an employer’s workforce. As alleged, soon after the close of the acquisition, Okta began to experience severe problems with the integration of Auth0. Then, in January 2022, Okta experienced a data security incident (the “January 2022 Incident”). Lead Plaintiff alleged that, during the Class Period, Defendants failed to disclose the severe problems with the integration of Auth0. Moreover, Lead Plaintiff alleged that Defendants failed to disclose the January 2022 Incident for two months and then failed to disclose that the Company had lost sales as a result of the January 2022 Incident. Lead Plaintiff alleges that the failures to disclose violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.

In a class action, one or more persons or entities (in this case, Class Representatives), sue on behalf of people and entities that have similar claims. Together, these people and entities are a “class,” and each is a “class member.” Bringing a case, such as this one, as a class action allows one court to resolve many individuals’ similar claims that might be too small to bring economically as separate actions. One court resolves the issues for all class members at the same time, except for those who exclude themselves, or “opt-out,” from the class.

The Court did not finally decide in favor of Class Representatives or Defendants. Instead, both sides agreed to a settlement that will end the Action. Class Representatives and Class Counsel believe that the claims asserted in the Action have merit. However, Class Representatives and Class Counsel recognize the expense and length of continued proceedings necessary to pursue their claims, including complex merits and expert discovery, summary judgment, trial and appeals, as well as the difficulties in establishing liability and damages. More specifically, Class Representatives faced the potential challenges associated with proving that Defendants made material misstatements during the Class Period, that Defendants deliberately misled investors, and that losses suffered by Class Members were caused by misleading statements made by Defendants. In light of the Settlement and the guaranteed cash recovery to the Class, Class Representatives and Class Counsel believe that the proposed Settlement is fair, reasonable, and adequate, and in the best interests of the Class.

Defendants have denied and continue to deny any allegations of wrongdoing contained in the Complaint. The Settlement should not be seen as an admission or concession on the part of Defendants. Defendants have taken into account the burden, expense, uncertainty, distraction, and risks inherent in any litigation and have concluded that it is desirable to settle upon the terms and conditions of the Stipulation.

The Court directed that everyone who fits the following description is a Class Member and subject to the Settlement, unless they are an excluded person (see FAQ 5 below) or took steps to exclude themselves from the Class (see FAQ 10 below):

All persons and entities who or which, during the period from March 3, 2022, through August 31, 2022, inclusive, purchased or otherwise acquired the publicly traded Class A common stock of Okta and were damaged thereby.

The Parties do not have access to your transactions in Okta Class A common stock. Please check your records or contact your broker to see if you are a member of the Class. If one of your mutual funds purchased Okta Class A common stock during the Class Period, that alone does not make you a Class Member. You are a Class Member only if you purchased or otherwise acquired Okta Class A common stock during the Class Period.

Yes. There are some individuals and entities that are excluded from the Class by definition. Excluded from the Class are: (i) Defendants; (ii) members of the Immediate Families of each Defendant that is an individual; (iii) the officers, directors, and control persons of Okta; (iv) any firm, trust, corporation, or other entity in which any Defendant has or had a controlling interest; and (v) the legal representatives, heirs, affiliates, successors or assigns of any such excluded party. Also excluded from the Class are any persons or entities who or which excluded themselves from the Class by submitting a timely and valid request for exclusion in accordance with the procedures described in FAQ 10 below or whose request is otherwise allowed by the Court.

In exchange for the Settlement and the release of the Released Plaintiffs’ Claims against the Released Defendant Parties, Defendants have agreed to fund, or cause to be funded, $60 million in cash to create a fund, which will accrue interest (the Settlement Fund), to be distributed, after deduction of Court-awarded attorneys’ fees and Litigation expenses, Notice and Administration Expenses, Taxes, and any other fees or expenses approved by the Court (the “Net Settlement Fund”), among all Class Members who submit valid Claim Forms that are found to be eligible to receive a distribution from the Net Settlement Fund (“Authorized Claimants”).

To qualify for a payment, you must be a member of the Class and you must submit a timely and valid Claim Form. A Claim Form is included with the Notice. You can also use a Claim Form, or submit a claim online. You can request that a Claim Form be mailed to you by calling the Claims Administrator toll-free at 1-888-622-9621 1-888-622-9621. The deadline to timely submit a Claim Form passed on October 29, 2024. However, at this time, you may still submit a late Claim Form, though there is no guarantee that late Claim Forms will be processed or accepted.

The Court held a Settlement Hearing on November 8, 2024, and entered a Final Order and Judgment approving the Settlement on November 19, 2024. Even though the Court approved the Settlement, there may be appeals which can take time to resolve, perhaps more than a year. It also takes a long time for all of the Claim Forms to be accurately reviewed and processed. Please be patient.

If you are a member of the Class, unless you excluded yourself, you will remain in the Class, and that means that, upon the “Effective Date” of the Settlement, you will release all “Released Plaintiffs’ Claims” against the “Released Defendant Parties.”

“Released Plaintiffs’ Claims” means any and all claims and causes of action of every nature and description, whether known claims or Unknown Claims (as defined below), contingent or absolute, mature or not mature, liquidated or unliquidated, accrued or not accrued, concealed or hidden, regardless of legal or equitable theory and whether arising under federal, state, common, or foreign law, or any other law, that Plaintiffs or any other member of the Class: asserted in the Action or could have asserted in the Action, or any forum, that arise out of or are based upon both: (1) the allegations, transactions, facts, matters or occurrences, representations or omissions involved, set forth, or referred to in the complaints filed in the Action, and (2) the purchase or acquisition of Okta Class A common stock during the Class Period. Notwithstanding the foregoing, Released Plaintiffs’ Claims shall not include: (i) claims to enforce the Settlement; (ii) claims brought in the following shareholder derivative actions: In re Okta, Inc. Stockholder Derivative Litigation, Case No. 3:22-CV-07480-SI (N.D. Cal.) (consolidated with Case No. 3:22-CV-08627-SI) (filed November 28, 2022); Austin Buono v. McKinnon, et al., Case No. 23-CV-00413-CFC (D. Del.) (filed April 14, 2024); and Tony F. Nasr v. McKinnon, et al., Case No. 24-CV-00106-CFC (D. Del.) (filed January 25, 2024); or (iii) any claims by Defendants for insurance coverage.

“Released Defendant Parties” means Defendants, and each of their respective past or present parents, subsidiaries, divisions, affiliates, stockholders, officers, directors, insurers, employees, agents, attorneys, advisors (including financial or investment advisors), accountants, auditors, consultants, underwriters, investment bankers, commercial bankers, general or limited partners, partnerships, limited liability companies, predecessors, successors, assigns, heirs, trustees, administrators, and any of their legal representatives (and the predecessors, heirs, executors, administrators, trustees, successors, Immediate Family members, purchasers, and assigns of each of the foregoing), in their capacities as such.

“Unknown Claims” means any and all Released Plaintiffs’ Claims that Class Representatives, or any other Class Member, do not know or suspect to exist in his, her, or its favor at the time of the release of the Released Defendant Parties, and any and all Released Defendants’ Claims that any Defendant does not know or suspect to exist in his, her, or its favor at the time of the release of the Released Plaintiff Parties, which if known by him, her, or it might have affected his, her, or its decision(s) with respect to the Settlement, including, in the case of any Class Member, the decision to object to the terms of the Settlement or to seek to be excluded from the Class. With respect to any and all Released Plaintiffs’ Claims and Released Defendants’ Claims, the Parties stipulate and agree that, upon the Effective Date, Class Representatives and Defendants shall expressly, and each Class Member, shall be deemed to have, and by operation of the Judgment or Alternative Judgment shall have, to the fullest extent permitted by law, expressly waived and relinquished any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law, including, or which is similar, comparable, or equivalent to, Cal. Civ. Code § 1542, which provides:

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

Class Representatives, other Class Members, or the Defendants, may hereafter discover facts, legal theories, or authorities in addition to, contrary to, or different from those which any of them now knows or believes to be true with respect to the subject matter of the Released Plaintiffs’ Claims and Released Defendants’ Claims, but Class Representatives and Defendants expressly, fully, finally, and forever waive, compromise, settle, discharge, extinguish, and release, and each Class Member shall be deemed to have waived, compromised, settled, discharged, extinguished, and released, and upon the Effective Date and by operation of the Judgment or Alternative Judgment shall have waived, compromised, settled, discharged, extinguished, and released, fully, finally, and forever, any and all Released Plaintiffs’ Claims and Released Defendants’ Claims, as applicable, known or unknown, suspected or unsuspected, contingent or absolute, accrued or unaccrued, apparent or unapparent, which now exist, or heretofore existed, or may hereafter exist, without regard to the subsequent discovery or existence of such different, contrary, or additional facts, legal theories, or authorities. Class Representatives and Defendants acknowledge, and all other Class Members, by operation of law shall be deemed to have acknowledged, that the inclusion of “Unknown Claims” in the definition of Released Plaintiffs’ Claims and Released Defendants’ Claims was separately bargained for and was a material element of the Settlement.

The “Effective Date” will occur when an Order entered by the Court approving the Settlement becomes Final and is not subject to appeal. If you remain a member of the Class, all of the Court’s orders, whether favorable or unfavorable, will apply to you and legally bind you. Upon the Effective Date, Defendants will also provide a release of any claims against Class Representatives and the Class arising out of or related to the institution, prosecution, or settlement of the claims in the Action.

The deadline to exclude yourself from the Class passed on October 18, 2024.

The Court appointed the law firm of Labaton Keller Sucharow LLP to be the lead counsel representing all Class Members. These lawyers are called “Class Counsel.” You will not be separately charged for the work of Class Counsel or any of Plaintiffs’ Counsel (Plaintiffs’ Counsel are Class Counsel and Adamski Moroski Madden Cumberland & Green LLP, and O’Neill, Heinrich, Damkroger, Bergmeyer & Shultz, P.C., L.L.O). The Court will determine the amount of all Plaintiffs’ Counsel’s fees and expenses, which will be paid from the Settlement Fund. If you want to be represented by your own lawyer, you may hire one at your own expense.

On November 19, 2024, the Court entered an Order Awarding Attorneys' Fees, Litigation Expenses, and PSLRA Awards as Amended by the Court. In the Order, the Court awarded $10,200,000.00 in attorneys' fees and $280,272.17 in expenses.

The deadline to object to the Settlement passed on October 18, 2024.

Objecting is telling the Court that you do not like something about the proposed Settlement, Plan of Allocation, or Class Counsel’s Fee and Expense Application. You can still recover money from the Settlement. You could have objected only if you stayed in the Class. Excluding yourself is telling the Court that you do not want to be part of the Class. If you excluded yourself from the Class, you had no basis to object because the Settlement and the Action no longer affected you.

The Court held a Settlement Hearing on November 8, 2024. On November 19, 2024, the Court entered a Final Order and Judgment approving the Settlement.

If you do nothing and you are a member of the Class, you will receive no money from this Settlement and you will be precluded from starting a lawsuit, continuing with a lawsuit, or being part of any other lawsuit against Defendants and the other Released Defendant Parties concerning the Released Plaintiffs’ Claims. To share in the Net Settlement Fund, you must submit a Claim Form (see FAQ 7 above).