The Securities and Exchange Commission is charging Facebook FB $100 million for misleading investors about the risks it faced from misuse of user data.
Facebook has agreed to pay the $100 million and to settle the charges, but has not admitted or denied the SEC’s allegations.
In a statement the SEC writes:
“For more than two years, Facebook’s public disclosures presented the risk of misuse of user data as merely hypothetical when Facebook knew that a third-party developer had actually misused Facebook user data. Public companies must identify and consider the material risks to their business and have procedures designed to make disclosures that are accurate in all material respects, including not continuing to describe a risk as hypothetical when it has in fact happened.”
The SEC states that public companies must have procedures in place to make accurate disclosures about material business risks.
“We allege that Facebook exacerbated its disclosure failures when it misled reporters who asked the company about its investigation into Cambridge Analytica,” said Erin Schneider, director of the SEC’s San Francisco regional office.
Facebook shares are trading down 1.58% at $199.16 during Wednesday’s pre-market session. The stock has a 52-week high of $218.62 and a 52-week low of $123.02.
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