Investors claim the company misled them and this led to a drop in the value of its stock.
The Supreme Court on June 10 agreed to look at a large shareholder lawsuit that claims Facebook parent Meta Platforms Inc. deceived investors regarding a data-harvesting controversy that involved Cambridge Analytica, a political consulting firm.
The case involves a private securities fraud-related class action arising out of the now-defunct UK-based Cambridge Analytica’s “wrongful acquisition and misuse of Facebook user data,” according to Facebook’s filing with the nation’s highest court.
Meta agreed in December 2022 to pay out $725 million to settle a class-action proceeding that said the company permitted third parties, including Cambridge Analytica, to gain access to as many as 87 million users’ personal information. The incident was made public in 2018.
Cambridge Analytica previously worked for then-candidate Donald Trump’s successful presidential campaign in 2016, and had access to personal data from millions of Facebook accounts for purposes of targeting and profiling voters. The account holders did not consent and had their data harvested by means of an app.
The scandal led to government investigations and Meta CEO Mark Zuckerberg was called to testify before Congress.
The Supreme Court granted the petition for certiorari, or review, in Facebook Inc. v. Amalgamated Bank, in an unsigned order.
No justices dissented and the court didn’t explain its decision. At least four of the nine justices must vote to grant the petition for it to advance to the oral argument stage.
The Supreme Court will examine whether a federal appeals court erred in allowing the multi-billion dollar lawsuit to proceed premised on allegations that Facebook, as the company was known at the time, inflated share prices by failing to provide adequate disclosure that its user data would be misused.
The investors claim that the controversy contributed to two 2018 price drops that led to the company losing more than $200 billion in market capitalization.
The U.S. Court of Appeals for the 9th Circuit ruled against Facebook in the case at hand in October 2023.
This is a developing story. This article will be updated.
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