The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Eastern District of New York on behalf of those who acquired Facebook, Inc. (“Facebook” or the “Company”) (NASDAQ: FB) securities from November 3, 2016 through October 4, 2021, inclusive (the “Class Period”). Investors have until December 27, 2021 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Facebook is the world’s largest online social network, with 2.5 billion monthly active users.
On September 13, 2021, The Wall Street Journal published an article titled “Facebook Says Its Rules Apply to All Company Documents Reveal a Secret Elite That’s Exempt.” It would be the first of nine articles published by the outlet based on documents provided by a then-unknown whistleblower (the “Whistleblower”). On this news, the Company’s share price declined by $2.18 per share, or approximately 0.5%, from $378.69 per share to close at $376.51 per share on September 13, 2021.
On September 28, 2021, The Wall Street Journal published an article titled “Facebook’s Effort to Attract Preteens Goes Beyond Instagram Kids, Documents Show.” The article stated, among other things, that “[i]nternal Facebook documents reviewed by The Wall Street Journal show the [C]ompany formed a team to study preteens, set a three-year goal to create more products for them and commissioned strategy papers about the long-term business opportunities presented by these potential users.” On this news, the price of Facebook shares fell declined by $12.93 per share, or approximately 3.7%, from $353.58 per share to close at $ 340.65 per share on September 28, 2021.
On October 3, 2021, after the markets closed, CBS News aired a television segment on 60 Minutes interviewing the Whistleblower, revealed to be Frances Haugen, on her findings during her time at Facebook. On that same day, CBS published an article containing highlights from the interview, stating, among other things, that “Facebook has realized that if they change the algorithm to be safer, people will spend less time on the site, they’ll click on less ads, they’ll make less money.” The following day, on October 4, 2021, CBS News published an article titled “Whistleblower’s SEC Complaint: Facebook Knew Platform Was Used to ‘Promote Human Trafficking and Domestic Servitude,’” containing the whistleblower complaints against Facebook filed with the U.S. Securities and Exchange Commission. On this news, the Company’s share price declined by $16.78 per share, or approximately 11.57%, from $343.01 per share to close at $326.23 per share on October 4, 2021.
The lawsuit alleges throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose: (1) Facebook misrepresented its user growth; (2) Facebook knew, or should have known, that duplicate accounts represented a greater portion of its growth than stated, and it should have provided more detailed disclosures as to the implication of duplicate accounts to Facebook’s user base and growth; (3) Facebook did not provide a fair platform for speech, and regularly protected high profile users via its Cross Check/XCheck system; (4) despite being aware of their use of Facebook’s platforms, the Company failed to respond meaningfully to drug cartels, human traffickers, and violent organizations; (5) Facebook has been working to attract preteens to its platform and services; and (6) as a result, Defendants’ public statements were materially false and misleading at all relevant times.