PROVIDENCE – R.I. General Treasurer Seth Magaziner announced Friday that the Employees’ Retirement System of Rhode Island has filed a lawsuit in Delaware against Facebook Co-Founder and CEO Mark Zuckerberg, Chief Operating Officer Sheryl Sandberg and members of the Facebook’s board of directors, alleging breaches of fiduciary duties pertaining to the social media outlet and Cambridge Analytica data-privacy scandal.
The lawsuit, filed July 16 in the Court of Chancery in Dover, Del., claims that Facebook user data was obtained by Cambridge Analytica without users’ consent leading up to the 2016 presidential election. The data was then used to promote various campaigns, including Donald Trump for president, Ted Cruz for U.S. Senate and the pro-Brexit movement in the United Kingdom, the suit states.
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Facebook agreed to pay $5 billion to the Federal Trade Commission for the incident and other related issues, which, the suit states, harmed the Employees’ Retirement System of Rhode Island. The system, according to Magaziner’s office, holds 151,533 shares of Facebook. The company’s stock was listed a $356.56 per share as of 1:55 p.m. on Friday.
The suit also alleges that the purported breaches of fiduciary duty caused significant damage to Facebook and impaired long-term shareholder value. It also alleges top Facebook executives and board members failed to ensure that the social media outlet complied with privacy laws and regulations and a prior consent agreement with the FTC.
“When Facebook leaders improperly allowed user data to fall into the hands of bad actors trying to influence elections in support of Donald Trump and others, they not only put our democratic system of government at risk, they also put shareholder capital at risk,” Magaziner said in a statement.
A public version of the complaint is set to be filed Aug. 6.
James Bessette is the PBN special projects editor, and also covers the nonprofit and education sectors. You may reach him at Bessette@PBN.com. You may also follow him on Twitter at @James_Bessette.
