Facebook Investor Lawsuit Is Dismissed

A class-action lawsuit against Facebook from investors alleging they weren’t told about the impact of a privacy breach has been dismissed, according to Reuters.

However, U.S. District Judge Edward Davila in San Jose, California said the investors can refile at a later date. He added that the investors did not succeed in connecting Facebook’s statements to losses or proving that the social media giant’s executives knowingly made false statements.

The lawsuit is a consolidation of several different complaints that were filed last year. It also names Facebook COO Sheryl Sandberg and CFO David Wehner.

The suit centers around the 2015 Cambridge Analytica scandal that allowed the British firm to access 87 million Facebook accounts. In 2018, it was reported that Facebook still gave third parties access to user data, and the Cambridge data, in particular, was used to help Donald Trump’s campaign.

After the news came out, Facebook’s stock dropped more than 18 percent in two weeks. Then, in July of last year, the stock dropped again by nearly 19 percent, right after an earnings report that showed growth was slowing and revenues were going down.

The investors allege that Facebook downplayed the real effects of these revelations on stock prices. Judge Davila said the investors did not show specific instances where false statements were made. He said the statements looked like general optimism and predictions about the future, which can’t be used as a basis for a lawsuit.

The investors have until Oct. 26 to refile the complaint. Davila said it was “possible plaintiffs can cure their allegations by alleging, among other things, more particular facts as to why statements by the individual defendants were false when made.”

Facebook is also facing lawsuits from several state and federal institutions for the data breach involving Cambridge Analytica and how the company handled the situation.