A federal judge has named Ohio the lead plaintiff in a class-action lawsuit that seeks to represent all Facebook investors who lost money in the wake of revelations about the company.
Filed in U.S. District Court for the Northern District of California, the suit accuses Facebook of violating federal securities laws by publicly misrepresenting its policies and practices, thus artificially inflating the value of its stock—until whistleblowers came forward.
“This case is about lies and losses—Facebook’s lies, and the losses incurred by our pension systems and others,“ Ohio Attorney General David Yost said in a July 28 statement. ”Ohio is happy and determined to lead in enforcing accountability against Facebook.”
In late 2021, leaked documents revealed that “Facebook misled the public about how its proprietary algorithm promoted offensive and dangerous content to users,” Yost said.
As a result of the scandal, Facebook’s reputation suffered and its stock price plummeted, which “erased more than $100 billion in shareholder value,” the suit says.
The Ohio Public Employees Retirement System (OPERS), which manages assets on behalf of more than 1.1 million state employees, retirees, and beneficiaries, lost $3 million in Facebook stock value, Yost said in the statement.
The suit was filed against Meta Platforms Inc., formerly known as Facebook, along with three company executives: Zuckerberg, who founded the social network in 2004; David Wehner, chief financial officer; and Nick Clegg, vice president of global affairs and communications.
Attorneys who are representing Meta in the lawsuit didn’t respond to a request by The Epoch Times for comment.
As a result of U.S. District Judge Jon Tigar’s July 26 decision designating Ohio as the lead plaintiff, Yost’s office will represent not only OPERS but also untold numbers of Facebook investors. He said he would seek to recover millions of dollars and “to compel Mark Zuckerberg, owner of Facebook, to reform (the company’s) internal practices,” the statement said.
If the case ends with damages awarded to the plaintiffs, “other retirement systems and Facebook investors can file claims to participate in the recovery,” Yost’s office said.
Leaked Facebook Documents
Facebook’s alleged misrepresentations undermined investors’ ability to make informed decisions.
“The magic of free markets doesn’t happen if the marketplace is filled with false information ... especially deliberately false information,” Yost said. “This lawsuit will serve to protect investors and the market as a whole.”
During much of 2021, Facebook had repeatedly assured investors that the company had “robust” systems in place to ensure users’ safety and security. But thousands of leaked internal Facebook documents showed the company allegedly acted in its best interest, to maximize profits, rather than in the public’s interest, the suit says.
The Wall Street Journal published its investigation in September 2021 in a five-day series of articles, “The Facebook Files.”
“Facebook Inc. knows, in acute detail, that its platforms are riddled with flaws that cause harm, often in ways only the company fully understands,” an introduction to the series reads. “That conclusion was based on internal Facebook documents, research reports, online employee discussions, and “drafts of presentations to senior management.
The primary whistleblower of that series was later identified as former Facebook project manager Frances Haugen. She gave interviews to other national media outlets, and also shared her concerns with the U.S. Securities and Exchange Commission and the U.S. Senate Subcommittee on Consumer Protection, Product Safety, and Data Security.
Shortly after Haugen’s disclosures, Ohio filed its lawsuit against Meta, alleging that “Defendants knew that Facebook’s platforms foster division and spread harmful content, facilitate illegal activity and violent extremism, and cause significant harm to children, but lacked the will or ability to correct those issues.”
Stock Price Decline
Between the publication of the Wall Street Journal’s first report on Sept. 13 and its Oct. 21 article raising concerns about the accuracy of Facebook’s user data, Facebook’s stock price declined by $54.08 per share, a 14 percent plunge, the suit says. At the time, the company had more than 2.3 billion shares of Class A common stock outstanding, On Oct. 28, Facebook changed its name to Meta.
As the lead plaintiff in the suit against Meta/Facebook, Ohio “will work directly with the class action lawyers in making important decisions about the case,” attorney Mike Allen, an Ohio legal analyst, said in a text message to The Epoch Times. He notes that class-action suits typically take years to conclude.
Ohio, which filed its motion to serve as lead plaintiff jointly with PFA Pension of Denmark, was chosen over the California Public Employees Retirement System, which also petitioned to serve as lead plaintiff.The suit seeks compensatory damages, plus reasonable costs and expenses involved with the lawsuit, including attorneys’ fees and expert fees.
