Last week, the Colorado Springs Regional Business Alliance announced that cybersecurity firm root9B will soon conduct round-the-clock manned cybersecurity operations from its Cascade Avenue headquarters.
But root9B’s parent company faces legal challenges from investors and questions about claims of success from cyber experts.
root9B is headquartered in the Springs and plans expansions across the country. It’s investing millions in a new Adversary Pursuit Center, said Chairman and CEO Eric Hipkins. There, it will provide cybersecurity services by remote computer network access. The center provides clients 24-hour, seven-day-a-week subscription-based services including “adversary pursuit, perimeter and host-based defense, network anomaly analysis, incident response, malware analysis and credential security,” according to its website.
“There’s not a lot of organizations focused on the adversary,” said Hipkins, 47. “The APC is a needed entity in the market.”
But the company is facing legal trouble, with investors suing for “false and misleading statements” about performance and offerings. root9B Technologies Inc. (RTNB), parent company of root9B, faces a class action lawsuit in U.S. District Court from the Central District of California on behalf of shareholders who purchased or held common stock from RTNB between Dec. 1, 2014, and June 15 this year. The suit was filed by Rigrodsky & Long, P.A.
The complaint alleges, “Defendants made materially false and misleading statements and omitted materially adverse facts, about the Company’s business, operations and prospects. Specifically, the Complaint alleges that the defendants concealed from the investing public that: (1) the Company does not have an advanced cyber security product offering, and (2) a substantial portion of the Company’s Cyber Solutions consists of a one-time low margin hardware installation, which the Company is moving away from. As a result of defendants’ alleged false and misleading statements, the Company’s stock traded at artificially inflated prices during the Class Period.”
According to seekingalpha.com, an online technology blog, (RTNB) is “a worthless reverse-merger created by insiders with [a] long history of penny-stock wipeouts, fraud allegations, and disaster while CEO [Joe] Grano [is] embroiled in [a] ‘fraudulent concealment’ and ‘breach of fiduciary duty’ lawsuit.
“RTNB’s claimed ‘cyber’ business is minuscule and imploding, while not a cyber-tech business but largely appears an old employee training program which RTNB resells or other irrelevant, overhyped offerings,” seekingalpha.com continued. “Insight is provided by investors and industry experts rather than sell-side analysts.”
Reached this week, Hipkins offered no comment on the lawsuit. He said plans for the Colorado Springs headquarters and APC will “absolutely not” change as a result of the lawsuit.
Hipkins said he worked for the federal government as a cryptologist, intelligence analyst and cybersecurity specialist, and while there, he said he realized “the government was not going to solve this problem” with its reactive approach.”