U.S. Supreme Court to hear Facebook bid to escape securities fraud suit

Supreme Court to hear Facebook securities fraud case involving data breach disclosure, impacting future private litigants.

The U.S. Supreme Court is set on Wednesday (November 6, 2024) to consider a bid by Meta's Facebook to scuttle a federal securities fraud lawsuit brought by shareholders who accused the social media platform of misleading them about the misuse of its user data.

Also Read: U.S. Senate committee questions tech executives about election threats

The justices will hear arguments in Facebook's appeal of a lower court's decision allowing the 2018 class action led by Amalgamated Bank to proceed. It is one of two cases coming before them this month - the other one involving artificial intelligence chipmaker Nvidia - that could lead to rulings making it harder for private litigants to hold companies to account for alleged securities fraud.

Also Read: Explained | How Facebook’s recent data breach affect its users

The plaintiffs accused Facebook of misleading investors in violation of the Securities Exchange Act, a 1934 federal law that requires publicly traded companies to disclose their business risks.

They claimed the company unlawfully withheld information from investors about a 2015 data breach involving British political consulting firm Cambridge Analytica that affected more than 30 million Facebook users.

Facebook's stock fell following 2018 media reports that Cambridge Analytica had used improperly harvested Facebook user data in connection with Donald Trump's successful U.S. Presidential campaign in 2016. The suit seeks unspecified monetary damages in part to recoup the lost value of the Facebook stock held by the investors.