Facebook and Nvidia request that the US Supreme Court exempt them from lawsuits alleging securities fraud.
Reuters, Washington, Nov. 4 Two tech titans’ requests will be considered by the U.S. Supreme Court; Meta’s (META.O) opens a new tab In separate cases, Facebook and Nvidia (NVDA.O) have opened a new tab to ward off federal securities fraud lawsuits that might make it more difficult for private plaintiffs to hold businesses accountable.
The justices may now be ready to limit the ability of private plaintiffs to enforce federal regulations intended to penalize corporate wrongdoing, following three decisions in June that undermined federal regulators, including the Securities and Exchange Commission, which oversees securities fraud.
Former SEC attorney Andrew Feller, who is currently in private practice, stated that Facebook and Nvidia would similarly find “a receptive audience” before the justices given the Supreme Court’s recent history of rendering business-friendly rulings that limited the power of federal regulators.
The conservative majority on the Supreme Court is 6-3.
“I think business interests will continue their recent pattern of aggressively challenging rules intended to hold them accountable, including by challenging the remaining private rights of action,” Feller stated.
The power of an individual or organization to file a lawsuit for alleged harm is known as a private right of action.
Facebook, a social media platform, and Nvidia, a chipmaker for artificial intelligence, filed an appeal with the Supreme Court after the 9th U.S. Circuit Court of Appeals in San Francisco permitted separate class action securities fraud cases against them to move forward.
Arguments in Facebook’s attempt to have a lawsuit alleging that the corporation misled investors in violation of the Securities Exchange Act—a 1934 federal statute requiring publicly traded firms to disclose their business risks—heard by the Supreme Court on Wednesday.
Over 30 million Facebook users were impacted by a 2015 data breach involving the British political consulting firm Cambridge Analytica, which the plaintiffs, a group of Facebook investors led by Amalgamated Bank (AMAL.O), open new tab, claimed the company concealed from investors.
Following 2018 media revelations that Cambridge Analytica had inappropriately stolen Facebook user data in connection with Donald Trump’s successful 2016 presidential campaign, Facebook’s stock plummeted, giving rise to the lawsuit. The lawsuit aims to recover the investors’ lost Facebook stock value in part by requesting unspecified monetary damages.
