Caption: In re KnowBe4, Inc. Securities Litigation.
Case No.: 25-22574-CIV-ALTONAGA/Reid
Jurisdiction: U.S. District Court, Southern District of Florida
Judge: Hon. Cecilia M. Altonaga
Summary
On December 22, 2025, Judge Cecilia M. Altonaga granted in part defendants’ motion to dismiss the consolidated amended complaint in the securities class action challenging disclosures made in connection with KnowBe4’s take-private merger. The Court dismissed certain Exchange Act claims while allowing others to proceed. The Court expressly granted plaintiffs leave to amend and set deadlines for further pleading.
Allegations Against KnowBe4, Inc.
Plaintiffs alleged that KnowBe4 and affiliated defendants made materially false and misleading statements and omissions in merger-related disclosures issued between October 2022 and February 2023. The complaint challenged statements concerning the independence of the special committee and its financial advisor, the fairness of the merger consideration to public stockholders, and disclosures regarding a private equity sponsor’s rollover of equity. Plaintiffs asserted claims under Sections 14(a), 10(b), and 20(a) of the Securities Exchange Act.
Defendants’ Motion to Dismiss
KnowBe4, its directors and officers, and private equity defendants moved to dismiss the consolidated amended complaint in full. They argued that the challenged statements were nonactionable, including statements of opinion or immaterial disclosures, and that plaintiffs failed to plead falsity, scienter, negligence, or loss causation. Defendants also contended that the control-person claims failed in the absence of a viable primary violation.
Plaintiffs’ Opposition
Plaintiffs argued that the proxy and related disclosures omitted material facts that rendered defendants’ statements misleading. They contended that the complaint adequately alleged actionable omissions regarding internal valuation assessments and changes in rollover decisions, and that those facts supported plausible inferences of negligence and scienter.
Court’s Ruling
The Court dismissed claims based on alleged misstatements and omissions concerning the independence of the special committee and the independence of the financial advisor. The Court allowed claims to proceed based on alleged omissions relating to the fairness of the merger price and disclosures concerning a private equity sponsor’s rollover decision. Control-person claims were permitted to proceed to the extent they were predicated on surviving Exchange Act violations.
Court’s Rationale
Falsity: The Court found that plaintiffs failed to plead with particularity that statements regarding committee and advisor independence were misleading. By contrast, the Court held that plaintiffs plausibly alleged actionable omissions where defendants disclosed merger fairness conclusions and rollover discussions while omitting internal valuation views and changes to rollover intentions that could alter the total mix of information available to stockholders.
Scienter: The Court held that plaintiffs failed to plead a strong inference of scienter as to KnowBe4, Daly, Shanley, and Wilson. As a result, Count II claims under Section 10(b) were dismissed as to those defendants. The Court concluded that plaintiffs adequately alleged scienter as to the remaining defendants with respect to the surviving statements.
Section 20(a): Control-person claims were dismissed only to the extent they depended on primary violations that were themselves dismissed. The claims remain viable where a primary Exchange Act violation was adequately pleaded.
Case Status
The case continues in part. Count I (Section 14(a)) proceeds against all defendants based on negligence. Count II (Section 10(b)) proceeds only against Venkataraman, Klausmeyer, Watzinger, Sjouwerman, KKR, Elephant Partners, and Vista; it was dismissed against KnowBe4, Daly, Shanley, and Wilson for failure to plead scienter. Plaintiffs must notify defendants by January 7, 2026, if they intend to amend and must file any amended pleading by January 18, 2026.
