Shareholders Slam Facebook in Wake of Data Breach Scandal

(CN) – Shareholders filed a class action against Facebook after revelations about the Cambridge Analytica data breach scandal accusing the social media giant of allowing third parties to access the personal information of millions of users without their consent, sending stock prices tumbling.

The federal securities class action was filed by investor Fan Yuan in the U.S. District Court for Northern California on behalf of anyone who purchased Facebook stock between Feb. 3, 2017, and March 19, 2018. The lawsuit names Facebook, CEO Mark Zuckerburg, and CFO David M. Wehner as defendants.

Facebook allegedly violated its own “purported” data privacy policies by allowing third party access while failing to disclose that discovery of the breach could lead to heightened regulatory scrutiny.

On May 16, 2017, Reuters published an article revealing that Facebook was fined 150,000 Euros, the maximum allowed at the time, by French privacy regulator CNIL for “failing to prevent its users data from being accessed by advertisers.” The company’s shares fell almost four percent over the next two trading days but “even after the CNIL fine, Facebook continued to conceal the extent to which its users’ data was available to third parties without user consent,” the suit states.

On March 17, 2018, the New York Times revealed that British data analytics contractor, Cambridge Analytica, worked to target voters online in connection with Donald Trump’s 2016 presidential campaign and held private data on 50 million Facebook users without permission or disclosure.

Facebook shares continued to decline while ensuing reports from other media outlets as well as investigations by the Federal Trade Commission and the U.K. Parliament are underway, with new details of the scandal emerging daily.

The class is represented by Jennifer Pafiti of Pomerantz LLP in Beverly Hills and Jeremy A. Lieberman and J. Alexander Hood II in New York.

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