On Tuesday, March 20, 2018, Facebook Inc. was sued by its investors in San Francisco federal court over a claim that the social media company failed to uphold privacy for its users. Investors stated that they faced losses due to the company’s connection to a UK-based research firm, Cambridge Analytica, that collected data for 50 million users without their permission. The same research firm is also connected to President Donald Trump.
After news of improper data collection surfaced on Monday, Facebook’s shares dropped 5.2 percent to $175.41, and another 2.6 percent on Tuesday to $168.15 per share following a report by Bloomberg that the company faces scrutiny by the Federal Trade Commission. The lawsuit may end favorably for investors if they can show that their investments were induced by the company based in part on false, misleading or incomplete information with regard to practices that might have averted the improper data collection on users.
Additional Reading:
Facebook Sued by Investors Over Voter-Profile Harvesting, Bloomberg (March 20, 2018)
Yuan v. Facebook, Inc. et al – Docket Report
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