Supreme Court Dodges Decision on Facebook Securities Fraud

The U.S. Supreme Court decided not to resolve a securities fraud lawsuit accusing Facebook of misleading investors about user data misuse. This leaves the lower court's ruling intact, allowing the lawsuit to proceed. The case follows a controversial 2015 data breach involving Cambridge Analytica.

The U.S. Supreme Court has chosen not to make a decisive ruling in a significant case involving Meta's Facebook and a securities fraud lawsuit. The case accuses Facebook of misleading investors over data misuse related to the infamous Cambridge Analytica breach. The high court's decision effectively means the lawsuit, originally permitted by a lower court, may proceed as planned.

This ongoing legal saga dates back to a 2015 data breach where Facebook user data was improperly accessed by Cambridge Analytica, a British consulting firm involved in Donald Trump's 2016 U.S. Presidential campaign. Investors argue that Facebook violated the Securities Exchange Act by failing to disclose this breach as a business risk, while Facebook contends it was under no obligation to reveal the information which it deemed hypothetical at the time.

The controversy sparked governmental probes into Facebook's privacy practices, including actions from the U.S. Securities and Exchange Commission and the Federal Trade Commission, resulting in hefty financial penalties for Facebook. The Supreme Court has historically reduced the power of regulatory bodies like the SEC in similar contexts, highlighting the complexity of securities fraud litigation.

(With inputs from agencies.)