US judge throws out stockholders' privacy suit against Facebook

Last Updated: Fri, Sep 27, 2019 13:37 hrs
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San Fracisco: A district judge in San Jose, California, dismissed a lawsuit filed by investors against Facebook Inc. and CEO Mark Zuckerberg claiming that the firm did not alert them about possible negative impacts of their activities on user privacy.

US District Judge Edward Davila ruled on Thursday that the investors had failed to show that Facebook and/or its executives knowingly made false statements that led to investor losses, thus rejecting the plaintiffs' case, Efe news reported.

The class action lawsuit, which had been combined from several separate investor complaints filed starting in 2018, also targeted Zuckerberg, along with Facebook COO Sheryl Sandberg and CFO David Wehner.

The plaintiffs cited the poor handling of privacy by the firm and the scandal involving British political consulting firm Cambridge Analytica, in which Facebook allowed that firm to access data for some 87 million Facebook users without their consent for political purposes.

The Britisn firm used Facebook user data to prepare psychological profiles of voters that it supposedly sold to the campaign of then-presidential candidate Donald Trump during the run-up to the 2016 vote.

The scandal put the firm, based in Menlo Park, California, in the focus of regulators' attention around the world and last July the US Federal Trade Commission fined Facebook $5 billion for the infraction.

The investors had claimed in their suit that Facebook and its top officers made numerous statements downplaying the effect that the Cambridge Analytica leak and user privacy issues would have on its stock price, which fell 18 percent in two weeks as a result of the scandal.

The $5 billion fine was the largest fine ever imposed in US history on a tech company and one of the largest in the history of the FTC, which also demanded that the firm comply with a series of measures to improve its operations regarding user privacy.