Facebook, $META, and Nvidia, $NVDA, ask the US Supreme Court to spare them from securities fraud suits.
The U.S. Supreme Court is set to review appeals from Meta’s Facebook and Nvidia, both seeking to dismiss federal securities fraud lawsuits in cases that could restrict the ability of private individuals to hold companies accountable.
Following several June Supreme Court rulings that limited the power of federal regulators like the Securities and Exchange Commission (SEC), the court may now consider curbing private plaintiffs' power to enforce federal regulations designed to penalize corporate misconduct.
Andrew Feller, a former SEC attorney, now in private practice, noted that the court's recent business-friendly rulings suggest Facebook and Nvidia may encounter "a receptive audience" in their cases. He added that "business interests will likely continue to challenge rules holding them accountable, including by contesting private rights of action."
Facebook and Nvidia’s appeals reached the Supreme Court after the 9th U.S. Circuit Court of Appeals allowed class-action securities fraud cases against them to proceed. On Wednesday, the court will hear arguments in Facebook’s attempt to dismiss a suit that alleges the company misled investors in violation of the Securities Exchange Act of 1934. The plaintiffs, led by Amalgamated Bank, claim Facebook withheld information regarding a 2015 data breach involving British firm Cambridge Analytica, which affected over 30 million users.
The lawsuit was triggered by a drop in Facebook’s stock following reports that Cambridge Analytica used improperly obtained user data during Donald Trump’s 2016 presidential campaign. The plaintiffs seek financial compensation to recover the lost value of their Facebook investments.
