ESG Controversy Case Study

Splunk: Securities fraud and class action lawsuit

November 16, 2022

In late 2020, Splunk Inc was the target of an investor-led lawsuit alleging securities fraud. In the aftermath of the scandal, the company valuation dropped significantly. Our news-based ESG Controversy Scoring Framework captured the various dimensions of this scandal.

Splunk hero cover

On December 3rd, 2020, the American software company Splunk Inc was the target of a class-action lawsuit alleging securities fraud.

In the fiscal quarter of 2020, the plaintiffs claimed that Splunk Inc. failed to close deals with its largest customers and that the company was not meeting its previously stated financial targets. They also claimed that the management had made misleading statements and failed to disclose financially relevant information.

The company lost up to 45% of its value in the weeks following the scandal.

Our news-based ESG Controversy Framework captured the various dimensions of the Splunk scandal as follows:

Fraud and sanctions Legal issues 0 1 2 3 4 J an 2020 Jul 2020 Jan 2021 Controversy Score December 2nd, 2020 Fiscal Q3 2020 revenues declined by 11% year-over-year and earnings per share missed analyst estimates by a wide margin. December 3rd, 2020 Several groups of investors filed a class-action lawsuit claiming that the optimistic management claims had misled the shareholders.

It's often difficult to follow all the news to build a complete ESG picture about a company, particularly when events are less reported. Leveraging local and global newswire coverage, the RavenPack ESG controversy framework allows investors to identify companies involved in controversial events before the information reaches the mainstream media. Beyond controversies, RavenPack’s decades-long news archive is a unique source of sustainability signals.

Check out other ESG controversy case studies, to further learn how the RavenPack ESG Scoring Framework works. Or explore the tool and see for yourself how it can help you stay on top of ESG controversies impacting your brands or portfolios.

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RavenPack’s ESG Controversy Scoring Framework is based on real-time detections of events across 40,000+ news sources in 13 different languages. It follows an event-based approach that can help assess the extent of a firm’s ESG controversy exposure through time by monitoring real-time news coverage.