Facebook, Inc. v. Amalgamated Bank

Facebook, Inc. v. Amalgamated Bank is a securities fraud class action arising from Facebook's disclosures about data privacy risks. Shareholders led by Amalgamated Bank alleged that Facebook's 2016 annual report described the risk of third-party misuse of user data as merely hypothetical, even though the company already knew Cambridge Analytica had improperly harvested data from millions of users. The district court dismissed the complaint, but the Ninth Circuit partially revived it, holding that the risk disclosures could be misleading. The U.S. Supreme Court granted certiorari and heard oral arguments on November 6, 2024. The central question is whether a statement that a risk could occur is actionable under federal securities law when the risk has already materialized.

As of November 22, 2024, the U.S. Supreme Court has heard oral arguments but has not yet issued a decision. The case remains pending before the Court.

Whether a company's statement that a risk "could" occur is false or misleading for purposes of Section 10(b) and Rule 10b-5 when the risk has already materialized, and whether such risk factor disclosures can form the basis of a securities fraud claim.

The case is expected to clarify the pleading standards for securities fraud claims based on risk factor disclosures. A ruling could significantly affect how public companies draft forward-looking risk statements and may influence shareholder litigation involving undisclosed, already-materialized risks.