investor is suing the social networking giant for allegedly misleading investors over the scandal involving Cambridge Analytica, the data analytics firm accused of misusing the personal data of millions of Facebook users.
The lawsuit, filed Tuesday in San Francisco federal court, accused Facebook of making false or misleading statements by failing to disclose it violated its own privacy policies by allowing Cambridge Analytica to access users' data without their consent. As a result, investors suffered financial loss due to the company's share price declining on the revelation, the complaint says (see below).
"As a result of defendants' wrongful acts and omissions, and the precipitous decline in the market value of the company's common shares, plaintiff and other class members have suffered significant losses and damages," the lawsuit says.
Facebook's share price has declined more than 10 percent in the first two trading days since The New York Times reported Saturday that Cambridge Analytica had harvested information from 50 million Facebook accounts without users' permission and then misused it for political ads during the 2016 US presidential election.
Facebook said Friday it has suspended Cambridge Analytica and Cambridge professor Aleksandr
, who created an app called "thisisyourdigitallife," a personality quiz that was billed as "a research app used by psychologists."
Kogan's data-gathering was in compliance with Facebook's rules. But in 2015, Facebook learned that Kogan had passed on that data to Cambridge Analytica without user permission, something that's against the social network's rules.
When Facebook found out, it demanded Cambridge Analytica and Kogan destroy the data. Facebook said it received certifications they had complied. Now there are allegations that not all the data had been destroyed.
The proposed class action would represent investors who bought Facebook shares between Feb. 3, 2017, when Facebook filed an annual report that plaintiff said "offered only a non-specific representation concerning data security," through March 19, two days after a New York Times story was published.
When reached for comment on the lawsuit, Facebook representatives referred to a statement it issued when it suspended Cambridge Analytica's account last week.
"We are committed to vigorously enforcing our policies to protect people's information. We will take whatever steps are required to see that this happens," Paul Grewal, Facebook deputy general counsel, said in a statement.
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