Reuters reports, on Friday Social Media giant Facebook and its chief executive Mark Zuckerberg were sued. Nearly $120 billion was wiped out of the shareholder’s wealth in a lawsuit over a disappointing earnings announcement by Facebook.
In a complaint filed by shareholder James Kachoris in Manhattan federal court, he accused Facebook, Zuckerberg and Chief Financial Officer David Wehner of making misleading statements about or being unable to disclose slowing revenue growth, falling operating margins, and declines in active users.
According to Kacouris, he said he was shocked when the truth began to emerge on Wednesday. He was at Menlo Park, his California based company. He further added 19 percent of Facebook shares had plunged the next day after the federal securities stemmed law violations by the defendants.
In the US shareholders sue companies in case there are unexpected stock price declines, especially if the loss of wealth is large. The Facebook lawsuit seeks class-action status and unspecified damages. The Facebook spokeswoman declined to comment on this.
Facebook is facing a dozen lawsuits related to its handling of user data in a scandal related to a U.K firm Cambridge Analytica. There is another list of such lawsuits pending in the federal court in San Francisco.
According to the Forbes magazine, Zuckerberg was tied with Warren Buffet as the world’s fourth-richest person. Berkshire Hathaway Inc with his current fortune being $83 billion topples Zuckerberg’s $66 million. With Buffet ranking number three, Zuckerberg slips to number six as Facebook share prices fell another 0.8 percent on Friday. Nasdaq closed at $174.89.
The ongoing case is between Kacouris v Facebook Inc et al, U.S. District Court, Southern District of New York, No. 18-06765.
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