Meta's Legal Battle Over Cambridge Analytica Scandal Heads To Supreme Court

Zinger Key Points
  • Supreme Court may kill a multibillion-dollar lawsuit against Meta Platforms later this year
  • Facebook determined Cambridge Analytica obtained the private information of more than 30 million users without their consent

The U.S. Supreme Court will reportedly consider spiking a multibillion-dollar lawsuit against Meta Platforms META that accuses the Mark Zuckerberg-led company of duping investors on the data-harvesting scandal involving British political consultancy Cambridge Analytica.

Justices said Monday they will decide whether a federal appeals court was wrong to let the lawsuit proceed on allegations that Meta, then known as Facebook, inflated share prices by inadequately disclosing the risk of misused user data, Bloomberg reports.

Investors say revelations about the scandal led to two 2018 price drops that cost Meta more than $200 billion in market capitalization.

Business groups led by the Chamber of Commerce urged the court to take up the case, saying that risk-disclosure allegations “have contributed to a wave of meritless securities-fraud suits,” Bloomberg reported.

Also read: Meta Likely To Report Higher Q1 Earnings; Here Are The Recent Forecast Changes From Wall Street’s Most Accurate Analysts

The Cambridge Analytica controversy first came to light in December 2015 when the firm reportedly used a database of information gathered from Facebook users to help Senator Ted Cruz‘s (R-TX) presidential primary campaign.

Facebook determined that Cambridge Analytica had obtained the private information of over 30 million users without their consent, according to suing shareholders.

But the shareholders say Meta publicly characterized the risk of a breach as hypothetical until March 2018, when it issued a statement to preempt stories in The New York Times and The Guardian that caused the share price to drop, shareholders said.

Shareholders say the company's inadequate disclosures also contributed to a July 2018 stock plummet that at the time was the largest one-day drop in value in U.S. history, Bloomberg reported.

The 9th U.S. Circuit Court of Appeals said the allegations were sufficient to let the lawsuit go forward.

The company could face a $2 billion settlement if it fails to prevent the case from going to trial, according to Matthew Schettenhelm, an analyst at Bloomberg Intelligence.

The high court will hear arguments and rule in the nine-month term that starts in October.

META Price Check: Meta’s shares gained 1.96% on Monday to close at $502.60.

Also read: What’s Going On With Meta Platforms Stock Wednesday?

Photo: Shutterstock

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