Meta Investor Suit After Supreme Court Decision – Claims Journal

The U.S. Supreme Court has dismissed Meta Platforms Inc.’s appeal, which means the company will face a hefty lawsuit from investors. This lawsuit alleges that Meta, previously known as Facebook, misled shareholders regarding the data-harvesting scandal involving Cambridge Analytica, a political consulting firm. Investors claim that Facebook inflated share prices by not being transparent about the risk of this scandal leading to the misuse of user data. As a result of revelations about the breach, two major price drops in 2018 caused the company to lose over $200 billion in market value.

Meta was hoping for a reversal of the federal appeals court decision to move the lawsuit forward. However, the Supreme Court declined their appeal after hearing arguments in November. The court did not provide an explanation for this decision, stating that the case was “dismissed as improvidently granted.” This dismissal suggests that Meta may now face a costly settlement, potentially reaching $2 billion, according to an analyst.

Meta expressed disappointment in the Supreme Court’s decision, stating that the plaintiff’s claims are baseless, and they will continue to defend themselves in court. On the other hand, the attorney for the investors declined to comment on the matter. This case could have broader implications for corporate disclosure rules, with business groups urging the court to side with Meta to prevent meritless securities-fraud suits.

The whole dispute originated from the Cambridge Analytica scandal, where Facebook was accused of allowing the British firm to access private information from millions of users without consent. Shareholders claim that Facebook downplayed the risk of a breach until 2018 when more information came to light about this incident. This lack of disclosure allegedly led to significant stock price drops and subsequent financial losses for investors.

The 9th US Circuit Court of Appeals ruled in favor of the shareholders, allowing the lawsuit to proceed. Meta argued that they had no reason to believe the scandal would impact the company, as the details were already public knowledge and hadn’t affected the stock price. The Biden administration supported the investors’ position in this legal battle. The case is ongoing, and it highlights the importance of transparent and accurate corporate disclosures in protecting investors and maintaining market integrity.