COLUMBUS, Ohio - The parent company of Facebook has misled investors and other members of the public about the risks its products pose to children, a lawsuit from the Ohio Public Employees Retirement System and Ohio Attorney General Dave Yost alleges.
Filed in a California federal court, the legal action states that Ohio’s largest public pension system purchased $47.6 million in Facebook stock in July. That was a few months before The Wall Street Journal published an investigative series based on documents leaked by former Facebook data scientist Francis Haugen that illustrate how for years the social media giant’s researchers have known that its Instagram forum is psychologically harmful for teenage girls, and still it planned an expansion that focused on pre-teens.
After the articles were published, OPERS sold $4.3 million of its shares at a loss. Facebook’s actions eliminated $100 billion in shareholder value, according to the lawsuit.
The OPERS 2020 annual report discloses that the pension system has more than one million members and manages around $94 billion in assets.
Facebook was OPERS’ sixth-largest stock position at the end of 2020. At the time, the pension fund owned around 1.5 million shares valued at $401 million.
Facebook CEO Mark Zuckerberg and other company officials were aware they were expressing false statements about the safety, security, and privacy of its platforms, according to the complaint. One of the internal documents cites that Facebook admits “we are not actually doing what we say we do publicly,” the lawsuit reads.
The lawsuit seeks to recover the fund’s lost value and demands that the company complete significant reform so it does not mislead the public regarding its internal practices. Yost said he will ask the court to appoint OPERS as the lead plaintiff by Dec. 27.
In a statement, Yost said, “Facebook said it was looking out for our children and weeding out online trolls, but in reality it was creating misery and divisiveness for profit. We are not people to Mark Zuckerberg, we are the product and we are being used against each other out of greed.”
Recently, the company changed its corporate name to Meta Platforms, Inc. The Instagram Kids expansion was delayed amid the wake of the Wall Street Journal series.
A Meta spokesperson told the media that “this suit is without merit and we will defend ourselves vigorously.”
If the lawsuit is granted class-action status, that would make OPERS and other shareholders eligible for any damages the court may award.
Columbus attorney David Meyer recently told WBNS-TV that "OPERS is an entity that's a shareholder of Facebook. So any shareholder of a publicly-traded company can file a securities lawsuit against the company for alleged violations of securities laws.”
Bernstein Litowitz Berger & Grossmann, a national law firm that specializes in class-action lawsuits and corporate securities fraud, are the lawsuit’s leads.
“These lawsuits are expensive. But most of these lawsuits are pursued by private lawyers that team up with, in this case, the state of Ohio, and at the end of the day, most of these lawyers - even we - take cases on a contingency fee,” Meyers added. “So the lawyers typically get paid in these cases only if they prevailed and if money is recovered."