A federal judge in San Jose, California, has dismissed a lawsuit accusing Facebook executives of deceiving investors about the likely impact of a privacy breach on its stock price, reports Reuters. US District Judge Edward Davila granted a motion to dismiss the claims after concluding that investors had failed to allege that Facebook or its executives knowingly made false statements that led to investor losses. However, investors have been given until 26 October to file an amended class action.
The lawsuit, which was consolidated from several investor complaints filed since last year, also targeted Facebook chief organisation officer Sheryl Sandberg and chief financial officer David Wehner. It came in the wake of a privacy breach that allowed Cambridge Analytica, a British political consulting firm, to access data for an estimated 87 million Facebook users.
The investors claimed in their lawsuit that Facebook and its executives made dozens of statements downplaying the effect that the Cambridge Analytica leak and related user privacy issues would have on its stock price. However, the judge said they had failed to identify specific instances of the company or its executives knowingly making false statements.
The report added that Facebook is also facing a separate nationwide lawsuit from users seeking to hold the company liable under various state and federal laws for allowing third parties, including Cambridge Analytica, to access their data.
