{"id":57619,"date":"2024-11-07T15:14:44","date_gmt":"2024-11-07T15:14:44","guid":{"rendered":"https:\/\/packetstormsecurity.com\/news\/view\/36568\/Facebook-Asks-U.S.-Supreme-Court-To-Dismiss-Fraud-Suit-Over-Cambridge-Analytica-Scandal.html"},"modified":"2024-11-07T15:14:44","modified_gmt":"2024-11-07T15:14:44","slug":"facebook-asks-u-s-supreme-court-to-dismiss-fraud-suit-over-cambridge-analytica-scandal","status":"publish","type":"post","link":"https:\/\/www.threatshub.org\/blog\/facebook-asks-u-s-supreme-court-to-dismiss-fraud-suit-over-cambridge-analytica-scandal\/","title":{"rendered":"Facebook Asks U.S. Supreme Court To Dismiss Fraud Suit Over Cambridge Analytica Scandal"},"content":{"rendered":"
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The US supreme court<\/a> grappled on Wednesday with a bid by Meta\u2019s Facebook<\/a> to scuttle a federal securities fraud lawsuit brought by shareholders who accused the social media platform of misleading them about the misuse of user data.<\/p>\n

The justices heard arguments in Facebook\u2019s appeal of a lower court\u2019s decision allowing the 2018 class action<\/a> suit led by Amalgamated Bank to proceed. The suit seeks unspecified monetary damages in part to recoup the lost value of the Facebook stock held by the investors. It is one of two cases coming before them this month \u2013 the other one involving artificial intelligence chipmaker Nvidia on 13 November \u2013 that could lead to rulings making it harder for private litigants to hold companies to account for alleged securities fraud.<\/p>\n

At issue is whether Facebook<\/a> broke the law when it failed to detail the prior data breach in subsequent business-risk disclosures, and instead portrayed the risk of such incidents as purely hypothetical.<\/p>\n

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Facebook argued in a supreme court brief that it was not required to reveal that its warned-of risk had already materialized because \u201ca reasonable investor\u201d would understand risk disclosures to be forward-looking statements.<\/p>\n

\u201cWhen we think about these questions, we\u2019re not looking only to lies or complete false statements,\u201d the liberal justice Elena Kagan told Kannon Shanmugam, the lawyer for Facebook. \u201cWe\u2019re also looking to misleading statements or misleading omissions.\u201c<\/p>\n

The conservative justice Samuel Alito asked Shanmugam: \u201cIsn\u2019t it the case that an evaluation of risks is always forward-looking?\u201d<\/p>\n

\u201cIt is. And that is essentially what underlies our argument here,\u201d Shanmugam responded.<\/p>\n

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<\/a> that affected more than 30 million Facebook users.<\/p>\n

Edward Davila, a US district judge, dismissed the lawsuit but the San Francisco-based ninth US circuit court of appeals revived it. The supreme court\u2019s ruling is expected by the end of June.<\/p>\n

The Cambridge Analytica data breach prompted US government investigations into Facebook\u2019s privacy practices, various lawsuits and a US congressional hearing. The US Securities and Exchange Commission in 2019 brought an enforcement action against Facebook over the matter, which the company settled for $100m. Facebook paid a separate $5bn penalty to the US Federal Trade Commission over the issue.<\/p>\n

The supreme court has a 6-3 conservative majority. Some of the conservative justices seemed to indicate that reasonable investors would read statements in forward-looking risk-factor disclosures as outlining issues that may have occurred in the past.<\/p>\n

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