The Ohio Public Employees Retirement System sued Meta Platforms Inc., formerly known as Facebook Inc., last Friday asserting that false statements made by the social media company caused it to lose more than $100 billion in shareholder value and suffer substantial reputational harm. The lawsuit targets the company and its senior executives for misleading investors about three separate categories of Meta’s business until an employee-turned-whistleblower’s Congressional testimony brought the truth to light.
The Northern District of California filing asserts that Meta, which generated most of its $86 billion in revenue in 2020 by selling advertisement placements to marketers, broke the public’s trust in order to make money. The company repeatedly misrepresented “that use of Facebook’s products does not harm children, that the Company takes aggressive and effective measures to stop the spread of harmful content, and that Facebook applies its standards of behavior equally to all users,” the complaint says.
According to the filing, Meta investors learned the truth when whistleblower Frances Haugen produced internal documents showing that the defendants were aware that “Facebook’s platforms facilitate dissent, illegal activity, and violent extremism, and cause significant harm to users, especially children,” but refused to remediate the issues.
The complaint seeks to certify a class of people and entities that purchased or otherwise acquired Facebook Class A common stock between Apr. 29, 2021 and Oct. 21, 2021, inclusive. It states two claims for relief against the company under Section 10(b) and against the individual defendants under Section 20(a) of the Securities Exchange Act of 1934.
The lawsuit is not the first of its kind. In late October, a disgruntled shareholder took aim at Meta on the basis of similar accusations. That lawsuit also contended that the company lied about the quantity of its monthly active users in certain markets and by correlation, its growth.
The Ohio Public Employees Retirement System is represented by Bernstein Litowitz Berger & Grossmann LLP and additional counsel the Office of the Attorney General of the State of Ohio.