Meta Platforms (NASDAQ: META) and a class of stockholders reached a surprise settlement to end a Delaware trial over the company’s long-running privacy lapses. Lawyers of the tech firm informed the plaintiff of the deal as day two of an eight-day proceeding began. Terms were not disclosed and will still need court approval.
The complaint accused founder Mark Zuckerberg and other directors of “intentional, recidivist violations of the law” for failing to honor a 2012 Federal Trade Commission consent order. Plaintiffs also alleged the insiders sold stock while knowing the company had not fixed its privacy controls.
Stockholders claimed the board “agreed to pay significantly more than what Facebook itself perceived as its maximum exposure to protect Zuckerberg from personal liability.” Had the case gone to verdict, Zuckerberg faced potential disgorgement of more than US$5 billion in alleged insider trading gains, with another US$3 billion hanging over fellow directors and officers.
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At issue were security gaps that let Cambridge Analytica siphon data on some 87 million users for political profiling during the 2016 US election. Former director Jeffrey Zients testified that the board viewed Zuckerberg as “essential” to Meta’s growth and resisted an earlier FTC bid to name him personally in a 2019 settlement.
The deal removes the prospect of Zuckerberg’s testimony next week and closes one of the last shareholder efforts to pin personal liability on Meta leadership. If approved, the payment will add to more than US$10 billion Meta has already spent on privacy-related fines and settlements since 2019.
A motion for preliminary approval is expected within days.
Information for this story was found via Law360 and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
