MANHATTAN (LN) — U.S. District Judge Paul Engelmayer appointed Clal Pension and Provident Ltd. as lead plaintiff securities class action against Varonis Systems Inc., ruling the Israeli entity’s approximately $21.9 million financial interest makes it the most capable of adequately representing the class.

The order, issued Monday, also approved Pomerantz LLP as lead counsel for the class, which covers investors who purchased Varonis stock between February 4 and October 28, 2025.

No party opposed the appointment of Clal or Pomerantz, streamlining the court’s review of the Private Securities Litigation Reform Act requirements.

The suit alleges Varonis misled investors about its annual recurring revenue by overstating its ability to convert on-premises customers to its software-as-a-service platform.

According to the complaint, CEO Yakov Faitelson repeatedly touted the transition during earnings calls in early 2025, stating in May 2025, "We see massive opportunity to increase the ARR from our existing customer base."

On October 28, 2025, Varonis reported third-quarter results that substantially reduced its ARR projections, citing underperformance in its on-premises subscription business.

The stock dropped from $63.00 to $32.43 the following day.

Clal certified it purchased 950,000 Varonis shares during the class period, incurring losses of approximately $21.9 million.

That financial interest far exceeded that of other potential lead plaintiffs, including original plaintiff Artem Molchanov, who held just eight shares and lost about $230.

Engelmayer noted that because no other party with a larger stake came forward, Clal’s financial interest presumptively made it the suitable lead plaintiff.

The judge found Clal satisfied Rule 23 requirements for typicality and adequacy, noting its claims arise course of conduct as the rest of the class.

Clal has retained Pomerantz LLP, which the court found well-qualified based on its experience in securities litigation.

The court terminated all pending motions and directed the clerk to proceed under the caption In re Varonis Securities Litigation.