Class action on behalf of diversified shareholders says insiders willfully ignored costs the Company imposes on society and diversified investors to boost traffic on its platform and generate more ad revenue
A class action was filed today in the Delaware Court of Chancery against the directors of Meta Platforms, Inc. by James McRitchie, an advocate for shareholders’ rights, who often works with The Shareholder Commons, a non-profit advocate for diversified shareholders.
The lawsuit outlines numerous reports that have highlighted Meta’s prioritization of profits over the interests of communities around the world, including its users. The complaint focuses on the persistent refusal of Meta’s directors and officers to account for the threat this behavior poses to Meta’s own diversified investors.
The lawsuit shows how, in order to drive more traffic and revenue, the algorithm governing the Facebook platform was changed to make it “an angrier place,” leading to harsher political discourse around the world. The complaint also details how Meta failed to spend money to prevent its platform from being used to promote modern slavery, ethnic violence, organized crime, and vaccine disinformation, to the detriment of global GDP.
The lawsuit charges that even though internal reports detailed how Meta’s Instagram platform created the “perfect storm” of mental health issues for its users, making “body image issues worse for one in three teenage girls,” the board members and top executives refused to account for the impact its products have on mental health. Mental health costs take a toll on the economy equivalent to those of cancer, diabetes, and chronic respiratory disease combined.
“We are pleased to see a lawsuit that seeks to hold Meta directors accountable for putting profits before the mental health of its users, the safety of abused workers, stable political systems, and public health,” said Frederick Alexander, CEO of The Shareholder Commons. “This lawsuit only comes after Meta’s board decided not to investigate how the reported behavior harms the economy that underpins the investment portfolios of its own shareholders.”
“I am a long-time investor in Meta, but I also have diversified holdings that depend upon a healthy global economy,” said Mr. McRitchie. “It’s important that the companies I own not engage in practices that threaten the financial return of my entire portfolio.”
A copy of the full complaint can be accessed here: https://theshareholdercommons.com/wp-content/uploads/2022/10/Stamped-Complaint-FINAL-10.3.22.pdf.
About The Shareholder Commons
The Shareholder Commons (TSC) is a non-profit organization that addresses social and environmental issues from the perspective of shareholders who diversify their investments to optimize risk and return. TSC’s advocacy focuses on the divergence that often emerges between a company’s interest in maximizing its cash flows over the long term and its shareholders’ interests in optimizing overall market returns.
Sophie Faris, Chief Operating Officer