SEC v. Facebook, Inc. Case No. 3:19-cv-04241-JD (N.D. Cal)
Oct. 6, 2022
On July 24, 2019, the Commission filed a complaint against Facebook, Inc. (“Facebook”). The Complaint alleged, among other things, that for more than two years, Facebook violated the federal securities laws when it made misleading statements in its required public filings about the misuse of its users’ data. From 2016 until mid-March 2018, Facebook presented the risk of misuse of its users’ data as merely hypothetical. In fact, Facebook had already become aware by December 2015 that a researcher had improperly sold information related to tens of millions of Facebook users to data analytics firm Cambridge Analytica. See the Commission’s Complaint.
Facebook was ordered to pay a $100 million civil penalty to the Commission. See Facebook’s Final Judgment.
On August 17, 2020, the Court entered an order that created a Fair Fund, for the $100 million paid by Facebook, so the penalty collected can be distributed to harmed investors. The Court also appointed Miller Kaplan Arase LLP, as the Tax Administrator of the Fair Fund to fulfill the tax obligations of the Fair Fund and appointed RCB Fund Services, LLC as the Distribution Agent to oversee the administration and distribution of the Fair Fund to harmed investors. See the Court’s Order.
The Fair Fund consists of the $100 million collected from Facebook and has been deposited in an interest-bearing account at the United States Treasury’s Bureau of Fiscal Service.
On March 14, 2022, the Commission filed a notice of motion, motion, and memorandum of law in support thereof for an order approving a distribution plan for the Fair Fund. See the Commission’s Motion and Memorandum of Law.
The Distribution Plan (the “Plan”) seeks to distribute the $100 million Fair Fund, plus interest, less taxes and administrative costs, to investors who purchased or acquired Facebook common stock from January 28, 2016 through March 19, 2018 to compensate injured Facebook investors for harm resulting from Facebook’s alleged misleading statements regarding the misuse of its users’ data. See the Plan.
On April 26, 2022, the Court approved the Plan. See the Plan.
For more information, please contact the Commission:
Office of Distributions