BFA represents Named Plaintiff Police & Fire Retirement System of the City of Detroit. This case arises from Defendants’ misrepresentations concerning the business impact and sustainability of a purportedly “record” round of Fortinet’s FortiGate firewall unit upgrades.
Plaintiffs allege that from November 8, 2024 to August 6, 2025, to convince investors that Fortinet was exiting a post-COVID financial slump, Defendants repeatedly touted a massive hardware upgrade or “refresh cycle” during which 650,000 or more FortiGate units were supposed to be upgraded over 2025 and 2026. For instance, Defendants told investors that his refresh cycle was “by far the largest we’ve seen probably ever” and would generate “around $400 million to $450 million in product revenue.” Defendants also made specific factual representations about the timing, progress, and impact of the refresh, including that it was only approximately 20% complete in mid-2025—meaning substantially more revenue was still to come—and that Fortinet was expanding its sales footprint as customers refreshed.
In truth, Defendants knew that the refresh cycle would not result in significant revenue—and that the numbers and other purported facts they used to quantify and bolster the purported impact of the refresh were misleading or omitted material information. Tellingly, while Defendants were touting the refresh as a major turnaround for Fortinet, they unloaded more than $160 million worth of their own personal company shares at inflated prices through suspicious insider sales.
Investors learned the truth on August 6, 2025, when Defendants admitted the refresh would “not provide much business impact” at all, represented only “a very small percentage” of Fortinet’s total business, and was already “40% to 50%” complete by the end of the second quarter of 2025. Additionally, Fortinet’s CEO and Defendant Ken Xie admitted “we probably [did] a little bit over-discuss . . . this refresh cycle.” On this news, the price of Fortinet stock declined $21.28 per share, or more than 22%, from $96.58 per share on August 6, 2025, to $75.30 per share on August 7, 2025, resulting in significant harm to investors.
