Security firm faces lawsuit with stock tanking tactic

MedSec ignited an ethical firestorm with its allegations against St. Jude Medical

One security firm’s controversial approach to pointing out flaws in products is facing legal action. On Wednesday, the firm MedSec was hit with a lawsuit after trying to tank a company’s stock.

The company, St. Jude Medical, has filed the legal action against MedSec for making false accusations about its products and for conspiring to manipulate its stock.

Two weeks ago, MedSec ignited an ethical firestorm when it publicized allegations that pacemakers and other devices from St. Jude Medical were insecure and open to hacks.

Pointing out flaws is nothing new in the security industry. But MedSec took the unusual step of trying to profit from the research by betting against St. Jude Medical. To do so, it partnered with investment firm Muddy Waters Capital to short the stock.

On Wednesday, St. Jude Medical fired back, claiming that both MedSec and Muddy Waters Capital are trying to profit from scared patients, it said in a statement.

St. Jude Medical is hoping the lawsuit sets the “record straight” about the security of its products. The company has dismissed the allegations as untrue. In addition, it seeks to discourage other parties from using the same tactics.

Muddy Waters, however, contends that St. Jude Medical is trying to silence its critics with the lawsuit.

“We are always prepared to vigorously defend our right to criticize a company that puts its profits before its patients,” it said in a statement on Wednesday.

Both Muddy Waters and MedSec, along with three principals at the two firms, are named as defendants in the lawsuit.

St. Jude Medical’s stock fell sharply two weeks ago, amid the accusations. But since then, the stock price has slowly risen. During that time, independent researchers from the University of Michigan have questioned MedSec’s allegations and called them inconclusive.

In response, MedSec had said that the University of Michigan researchers failed to properly recreate the attacks it used to test products from St. Jude Medical.

The U.S. Food and Drug Administration is also investigating the issue but has said affected patients should still continue using the devices as instructed. 

Join the CSO newsletter!

Error: Please check your email address.

More about engin

Show Comments

Featured Whitepapers

Editor's Recommendations

Solution Centres

Stories by Michael Kan

Latest Videos

  • 150x50

    CSO Webinar: The Human Factor - Your people are your biggest security weakness

    ​Speakers: David Lacey, Researcher and former CISO Royal Mail David Turner - Global Risk Management Expert Mark Guntrip - Group Manager, Email Protection, Proofpoint

    Play Video

  • 150x50

    CSO Webinar: Current ransomware defences are failing – but machine learning can drive a more proactive solution

    Speakers • Ty Miller, Director, Threat Intelligence • Mark Gregory, Leader, Network Engineering Research Group, RMIT • Jeff Lanza, Retired FBI Agent (USA) • Andy Solterbeck, VP Asia Pacific, Cylance • David Braue, CSO MC/Moderator What to expect: ​Hear from industry experts on the local and global ransomware threat landscape. Explore a new approach to dealing with ransomware using machine-learning techniques and by thinking about the problem in a fundamentally different way. Apply techniques for gathering insight into ransomware behaviour and find out what elements must go into a truly effective ransomware defence. Get a first-hand look at how ransomware actually works in practice, and how machine-learning techniques can pick up on its activities long before your employees do.

    Play Video

  • 150x50

    CSO Webinar: Get real about metadata to avoid a false sense of security

    Speakers: • Anthony Caruana – CSO MC and moderator • Ian Farquhar, Worldwide Virtual Security Team Lead, Gigamon • John Lindsay, Former CTO, iiNet • Skeeve Stevens, Futurist, Future Sumo • David Vaile - Vice chair of APF, Co-Convenor of the Cyberspace Law And Policy Community, UNSW Law Faculty This webinar covers: - A 101 on metadata - what it is and how to use it - Insight into a typical attack, what happens and what we would find when looking into the metadata - How to collect metadata, use this to detect attacks and get greater insight into how you can use this to protect your organisation - Learn how much raw data and metadata to retain and how long for - Get a reality check on how you're using your metadata and if this is enough to secure your organisation

    Play Video

  • 150x50

    CSO Webinar: How banking trojans work and how you can stop them

    CSO Webinar: How banking trojans work and how you can stop them Featuring: • John Baird, Director of Global Technology Production, Deutsche Bank • Samantha Macleod, GM Cyber Security, ME Bank • Sherrod DeGrippo, Director of Emerging Threats, Proofpoint (USA)

    Play Video

  • 150x50

    IDG Live Webinar:The right collaboration strategy will help your business take flight

    Speakers - Mike Harris, Engineering Services Manager, Jetstar - Christopher Johnson, IT Director APAC, 20th Century Fox - Brent Maxwell, Director of Information Systems, THE ICONIC - IDG MC/Moderator Anthony Caruana

    Play Video

More videos

Blog Posts

Market Place