First class action against Facebook
The class action complaint alleges that since at least February 2017, Facebook failed to disclose in public securities filings that the company allowed outside firms such as Cambridge Analytica to access the personal data of millions of unwitting Facebook users.
Over the past few days, the New York Times’ disclosure of Cambridge Analytica’s extensive access to Facebook data and subsequent reporting on regulatory fallout led to a drop in share price from a high of about $185 on Monday to $164.83 at the close of trading on Tuesday.
The complaint also cites a previous stock drop, in May 2017, when France’s Commission on Informatics and Liberty fined Facebook about $230,000 (then the maximum) for failing to block advertisers’ access to user data.
The class action was filed by an individual investor, Fan Yuan, who is represented by the shareholder class action firm Pomerantz. That doesn’t mean Yuan or Pomerantz will end up running the case.
Under the rules for securities class action, other Facebook investors now have 60 days to decide if they want to compete with Yuan to be named lead plaintiff in an appointment process that typically favors institutional investors.
Several plaintiffs' firms have issued press releases urging Facebook investors to contact them, a standard practice in securities class action litigation. Pomerantz co-managing partner Jeremy Lieberman said his firm is consulting with its pension fund clients to gauge their intentions. ■