US court dismissed the case of Meta's allegations of fraud leveled by shareholders; Upheld the old decision
Meta: Facebook argued that providing information about risks is only for potential events and investors understand that such risks are related to future events. At the same time, President Joe Biden's administration supported the shareholders in this matter.
The US Supreme Court did not give any decision in the case of Meta's allegations of fraud leveled by shareholders on social media platform Facebook on Friday. The case is related to allegations of Facebook misleading investors about the misuse of user data on the social media platform.
The US Supreme Court heard arguments in the case on November 6 and on Friday rejected Facebook's appeal-wherein it had challenged the 2018 decision of the lower court that allowed the shareholders to continue the lawsuit. The Supreme Court refused to hear the case, maintaining the decision of the lower court.
It issued a one-line order dismissing the case in which no interpretation was given. The case is one of two major deals before the Supreme Court this month on giving private parties the right to take action against companies for alleged securities fraud. Another one, an artificial intelligence chip maker called Nvidia, and arguments in that case were heard on November 13.
Facebook investors are accusing the company of failing to disclose a data breach to investors involving the British political consulting firm Cambridge Analytica back in 2015, which left more than 30 million Facebook users vulnerable. Investors argued that keeping the problem under wraps meant Facebook had violated the Securities Exchange Act of 1934, which obligates publicly traded companies to disclose the risks to their businesses.
After media reports last year showed that Cambridge Analytica-which had misused the social network's data to campaign for Mr. Trump's election as president in 2016-the social network's share price fell. Investors tried to compensate for the loss in the value of their shares.
Facebook spokesman Andy Stone expressed disappointment over the Supreme Court's decision and said, "We believe the plaintiff's claims are baseless and we will continue to defend ourselves in the district court."
Facebook argued that risk information is only for potential events and investors understand that such risks are related to future events. At the same time, President Joe Biden's administration supported the shareholders in this matter.
