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Ohio's Largest Public Pension Sues Facebook, Saying the Media Giant Misled Investors (dispatch.com) 74

Posted by msmash from the tussle-continues dept.
Ohio's largest public pension system filed a class-action lawsuit against Facebook, alleging that the social media giant misled investors and breached the public's trust. From a report: Ohio Public Employees Retirement System, which manages $125 billion on behalf of 1.1 million Ohioans, says it purchased Facebook stock "at artificially inflated prices" in 2021 and suffered damages because of Facebook's violations of federal securities laws. "Defendants were aware that Facebook's platforms facilitate dissension, illegal activity, and violent extremism, and cause significant harm to users, especially children, but Facebook refused to correct these issues," the federal lawsuit alleges. "All told, these disclosures erased more than $100 billion in shareholder value and subjected Facebook to immense reputational harm." The lawsuit comes after former Facebook project manager Frances Haugen testified before Congress that the company "put their astronomical profits before people."
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Ohio's Largest Public Pension Sues Facebook, Saying the Media Giant Misled Investors More

Ohio's Largest Public Pension Sues Facebook, Saying the Media Giant Misled Investors

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  • Rhetorical questions for $1,000 Alex (Score:4, Insightful)

    by NFN_NLN ( 633283 ) on Monday November 15, 2021 @01:23PM (#61990721)

    > "Defendants were aware that Facebook’s platforms facilitate dissension, illegal activity, and violent extremism, and cause significant harm to users, especially children, but Facebook refused to correct these issues," the federal lawsuit alleges.

    So if the stock had gone up in price instead, would they still sue?

    • Re:Rhetorical questions for $1,000 Alex (Score:5, Informative)

      by Gibgezr ( 2025238 ) on Monday November 15, 2021 @01:30PM (#61990743)

      No, the reason for the lawsuit is not one of ethics or morality, it is because mismanagement caused loss of monetary value. The premise is that company leadership should have known that to "facilitate dissension, illegal activity, and violent extremism, and cause significant harm to users, especially children" would lead to financial harm for the company.

      • Re: (Score:3)

        by lsllll ( 830002 )
        Most other investors would just hold on to the stock, thinking it'd go back up. Plus, according to the price chart [yahoo.com], unless they bought in September and sold in October, they're in the money.

        • Re: (Score:2)

          by NFN_NLN ( 633283 )

          9/7/2021 - $382.18
          11/12/2021 - $340.89

          Loss of $41.29/share

          • Re:Rhetorical questions for $1,000 Alex (Score:4, Interesting)

            by lsllll ( 830002 ) on Monday November 15, 2021 @02:05PM (#61990885)
            Read the article. They purchased 139000 shares between May and September. 139000*$380$60 million. Even if they lost it all, it doesn't amount to "The lawsuit seeks to recover more than $100 billion in lost investment value". Something is fishy and we're not getting the full story.

            • You haven't considered what the phrase "investment value" might (does) mean, though. You're just ignoring the words, and using your own idea of which numbers to add up.

              we're not getting the full story

              Or perhaps merely not listening.

              • Re: (Score:1)

                by clovis ( 4684 )

                The Columbus dispatch uses the phrase $100 billion in "shareholder value" at the beginning of the article and $100 billion is "investment value" at the end.
                Doesn't matter either way. I suspect what the suit is really about is the part where the Ohio AG said "to force significant reforms at Facebook".

                • Those terms mean the same thing. And they don't mean what is presumed above in the thread.

                  Source: am active stock trader who beats the market

                  The meaning of the words are material to understanding what the accusation is. The wording doesn't claim they lost $price_purchased - $price_sold. It claims they lost $value of investment based on facts claimed by FB in their filings - $value of investment after true information was leaked.

                  If you lie on your SEC filings, shareholders usually sue for what they reasonab

            • The full story is that this is FUD created in an attempt to manipulate the stock price ahead of the ticker change. Nothing to see here. Move along.

      • Re: (Score:2)

        by NFN_NLN ( 633283 )

        > The premise is that company leadership should have known that to "facilitate dissension, illegal activity, and violent extremism, and cause significant harm to users, especially children" would lead to financial harm for the company.

        Then they already lost the case. Facebook admits it uses divisiveness to ultimately drive user interaction, putting profits ahead of people.

        • What the pension system will have to prove is that the efforts to put profits ahead of people backfired, wiping out more shareholder value than if facebook had exercised more heavy-handed censorship in the first place.

        • Was that in their prospectus, or did they publish the risks associated with that in any of their 10-K filings?

      • The premise is that company leadership should have known that to "facilitate dissension, illegal activity, and violent extremism, and cause significant harm to users, especially children" would lead to financial harm for the company.

        The main problem is that they didn't disclose the risk to investors, and then it harmed them, not merely that their activities hurt the price.

    • Re: (Score:1)

      by jm007 ( 746228 )

      ZING!!!

    • Rhetorical questions for $2,000 Alex (Score:5, Insightful)

      by OzPeter ( 195038 ) on Monday November 15, 2021 @01:55PM (#61990835)

      > "Defendants were aware that Facebook’s platforms facilitate dissension, illegal activity, and violent extremism, and cause significant harm to users, especially children, but Facebook refused to correct these issues," the federal lawsuit alleges.

      So if the stock had gone up in price instead, would they still sue?

      Why did they buy stock in 2021? The plaintiffs should have known this in 2020. It was no big secret then that FB was a toxic platform.

    • Re: (Score:1)

      by clovis ( 4684 )

      > "Defendants were aware that Facebook’s platforms facilitate dissension, illegal activity, and violent extremism, and cause significant harm to users, especially children, but Facebook refused to correct these issues," the federal lawsuit alleges.

      Oh, it's Facebook they're suing.
      At first I wondered if they were suing Fox News, or is it CNN doing all that this week?

      In other words, what Facebook is accused of doing is par for the course for many news organizations. I don't see any way that a news provider/aggregator can be sued for causing trouble with news. Even if it caused someone to lose money.

  • this is what passes... (Score:2, Interesting)

    by jm007 ( 746228 )

    this is what passes for gov't accountability: "It's not our fault, they tricked us."

    are we to assume the gov't agency folks are qualified and hired to make these very types of decisions?

    lack of accountibility in a purported republic gov't has got to be one of its worst failings; fixing that alone would make things so much better

  • Buyer Beware. (Score:5, Insightful)

    by Fly Swatter ( 30498 ) on Monday November 15, 2021 @01:31PM (#61990749) Homepage
    Why are pensions investing in risky stocks? Sounds like bad pension management.

    • Re:Buyer Beware. (Score:5, Informative)

      by superdave80 ( 1226592 ) on Monday November 15, 2021 @01:43PM (#61990785)
      The reason they are involved in risky stocks is that public pensions (at least in my state of California, not sure about Ohio) are GUARANTEED by the taxpayers. So, the government employees have no reason NOT to take risk, because if the stocks fall, taxpayers have to make up the difference anyways. That has happened in California after we (stupidly) raised pensions 50% at the height of the Dot-com boom. Market crashed, and local governments had to start funneling more money into the pensions funds. It also happened after the 2007 recession, as we had not even recovered from the Dot-com crash yet.

      • The reason they are involved in risky stocks is that public pensions (at least in my state of California, not sure about Ohio) are GUARANTEED by the taxpayers.

        Nothing free about this market then. Incentives grossly distorted by government once again.

      • Except when the taxpayers decide they don't want to fund pension plans anymore (or if they want to put in less money than is needed to cover the pensions they already promised, or "borrow" from state pension funds to instead give tax breaks), in which case you are just SOL. See for example: Illinois
        • "they want to put in less money than is needed to cover the pensions they already promised" - Note: In California, 'they' is not the guaranteeing taxpayers, 'they' are the democratic politicians that receive enormous campaign contributions from the public unions, whose pensions they are negotiating. And that's how California 'turned blue'. Pure, on going, political corruption.
        • That's not how a public pension plan works. Taxpayers have no say in whether or not they have to pay the pensions. If it isn't funded now (or lower returns than expected), it gets funded later. There is no 'out' for us.
          • Illinois has a long history of underfunding its state pension plans. Decades and decades, maybe even a century. And both political parties have contributed to this. Choosing to not fully fund your pension program is a political decision. It is easier to spend money now instead of setting it aside for something later, even if you have promised to your teachers and other public servants that you will take care of them in retirement.

            State-level bankruptcy, or drastically cutting pension benefits seem like re
      • it's just garden variety corruption. Dig into what happens to the people who run the pension funds after their tenure, or whose campaigns they contributed to before being appointed.
    • Corruption.

    • Nothing else offers any real return.

    • "Why are pensions investing in risky stocks?"

      All individual investments carry a risk. Assembling a portfolio involves evaluation of the expected return in the face of that risk and the correlation of the risks with other investments, Free markets require accurate information about the products in the market so that resources are efficiently allocated. In the market for investments, the required information is the risks that the management sees to continued operation. Lying about the risks to your company is

    • That makes no sense. Facebook isn't a risky stock by market standards.

      There's a term in investing right now called the FAANG stocks. That's Facebook, Apple, Amazon, Netflix and Google (despite name changes to two of them); those 5 have on their own dragged the market up where other industries have been failing. So they wouldn't be risky except under odd circumstances.

      On top of that, pensions have a fiduciary responsibility to be good stewards of their beneficiaries' money. Not participating in t

  • Literally anything with users in the billions is used for all of those activities and those have all been known since before Facebook's IPO. Yet, they bought Facebook stock in 2021 and continued to buy it up until September 2021, just 2 months ago, and now claim they were misled by the executives for an issue known since practically the existence of Facebook? You have got to be kidding me. The second half of their argument doesn't make any sense either, if Facebook put profits first, as a corporation is sup
    • I'm guessing it's just the investment managers trying to cover their assess. They made a bad financial bet on Facebook and lots tons of public money, and now they are trying to deflect the blame.

      I don't get how the lawsuit is supposed to help, though. Won't a large payout to the investment firm lower Facebook's profits, thereby decreasing Facebook's value and further lowering share prices?
  • What's weird is nobody seems to care. You'd think we'd be furious, but most folks seem mad they don't have a pension, nevermind they don't ask why they don't have one...

  • - Public companies have a fiduciary duty to maximize shareholder value (ie. profits)
    - Public companies are also expected to have some sort of morality from the public, law makers and politicians in general

    I feel the two are diametrically opposed, since the companies will get sued if they do anything that decreases shareholder value, and/or get sued/get reputational damage (leading the less shareholder value) if they do anything that harms the public in general.

    I feel the solution is to not let so many compa

    • - Public companies are also expected to have some sort of morality from the public, law makers and politicians in general

      Its supposed to be "Here are the rules. Everyone plays by them, or else."

      How did morallity get into this?

      We dont need a government picking and choosing whats "moral" - we need a government to set and enforce rules - a key part of this is that the rules as set must be realistically enforceable in a fair manner - such that both the honest and dishonest players have the same deal - but they never are - instead of fair enforcement we have more and more rule making based on whatever morality is trendy today

      • To use an extreme example, if a company can profitably turn human corpses - a waste product by any measure - into tasty, nutritious protein bars, then a modern company will feel it has a fiduciary obligation to its shareholders to do so.

        And if the supply of corpses begins to run low and thus affect production, the company should feel no compunctions over inciting gang violence, high-risk behaviors and other methods to increase the supply of corpses for its protein bar manufacture.

        Morality gets into -ev
        • Many companies are just that - amoral. They do not have a well defined morality of their own, but they will follow public opinion: they stay away from things that are widely accepted by the public as immoral (like turning corpses into protein bars), and pretend to hold morals that are in vogue (such as saving the rainforests). But in the end, those "morals" can be summarized as "whatever we can get away with".

        • ^^Brilliant argument - mod parent up!

    • A free market requires accurate information for the participants to make efficient decisions. It is not morality that requires companies to provide accurate information, it is capitalism. Lying to the market is anti-capitalist.

      • ...It is not morality that requires companies to provide accurate information, it is capitalism. Lying to the market is anti-capitalist.

        If what you say is true, then capitalism is a fiction and never existed, because there have always been lots of companies "lying to the market", and many of them have been richly rewarded for their misdeeds. Can you say "subprime mortgages"?

    • - Public companies have a fiduciary duty to maximize shareholder value (ie. profits)

      False. And furthermore, you can't show any where in the US Code it says that, because it isn't there. Milton Friedman started pushing that shit back in 1970, and acted all surprised in 2008.

  • They lost 80% of their value in 2021? (Score:4, Insightful)

    by lsllll ( 830002 ) on Monday November 15, 2021 @01:54PM (#61990831)
    There's gotta be more to the story. Unless they were playing with options and completely speculating, according to the FB price chart [yahoo.com], there's no way they could have wiped 80% of their value, even if they solely invested in FB. Either way, it should be the pensioners who should be taking the pension managers to court, not the pension program taking FB to court.
    • They are saying that FB's stock lost $100b, not that the pension lost $100b. They lost money through FB's loss of $100b in value, and they believe that it's enough of a loss to justify shooting their money bazooka at the lawyers. I'm just wondering how much money this pension has tied up in crypto.

      • Re: (Score:2)

        by lsllll ( 830002 )
        I was wondering the same thing, but then later the article says "The lawsuit seeks to recover more than $100 billion in lost investment value". So it makes it look like they lost $100b.
        • It's class action, so the lawsuit is trying to recover for *all investors* during that period of stock price drop. Good luck with that.
  • With testimony before Congress affirming that Facebook put astronomical profits before people, the Ohio PERS is upset that the profits WERE NOT ENOUGH to satisfy the broader stock market investors?!

    Also, everybody knows your investments are not guaranteed any rates of return! If Facebook (now Meta Platforms) was truly manipulating the stock price somehow (has Ohio PERS not heard of the GameStop/WallStreetBets superstonk meme craze?!), then Ohio PERS is just upset that they got in too late! The onus is on
  • Comment removed based on user account deletion

    • As an Ohio taxpayer, public pensions really piss me off. Why the hell am I subsidizing a benefit I don't even get?

      So your complaint specifically is that since you don't benefit, you should not have to pay. Based on that logic, I should not have to pay any taxes in Ohio for the streets you use but I do not use. Since I have no children, I should not have to pay education for any children you have.

      Let them have a savings retirement plan like everyone else.

      Do you have a time machine to go back in time and change the retirement system for thousands of past public employees that were granted a pension after decades of service?

      • Comment removed based on user account deletion

      • Re: (Score:1)

        by jm007 ( 746228 )

        valnar's logic makes sense to me: I get nothing out of it, so why should I care?

        nothing wrong with self-interest, in fact, it's nature's way; you do it, I do it, animals do it, we all do it; some like to fib and pretend they're all noble and altruistic, but nah.... self-interest rules the day

        and yes, that means you, me, he, she, etc, shouldn't pay taxes for anything that they don't benefit from; but of course it doesn't always play out that way, but it's something to shoot for nonetheless

        not sure what t

        • Re:Public pensions (Score:5, Insightful)

          by UnknowingFool ( 672806 ) on Monday November 15, 2021 @03:34PM (#61991193)

          valnar's logic makes sense to me: I get nothing out of it, so why should I care?

          The entire text of his comment: "As an Ohio taxpayer, public pensions really piss me off. Why the hell am I subsidizing a benefit I don't even get? Let them have a savings retirement plan like everyone else.". It is 3 sentences. He says nothing about not caring. He specifically says he should not have to pay any part of a public employee's pension because he he does not qualify for that pension.

          and yes, that means you, me, he, she, etc, shouldn't pay taxes for anything that they don't benefit from; but of course it doesn't always play out that way, but it's something to shoot for nonetheless

          So if you have children and I do not and we live in the same area, you would exempt me from paying any taxes towards your children's education then? Since I do not travel the same roads as you I should not have to pay for your roads? Since I am not handicapped and you might be, I do not have to pay for any wheelchair ramps. Since I have not had any fires in my house, I do not have to pay for fire department services. Do you see how asinine that logic could become?

          not sure what the point of a time machine is... it would seem like part of a plan to reduce the existing phukkery would be to ensure that those ensnared in the old way would be migrated to the new, better way; that would be how I would do it, but will let valnar clarify his own comments

          You do understand that these pension plans were instituted decades ago, right? These are not new things created yesterday. You do understand that thousands of public employees have since retired on these pensions in the past and currently, right? In order to effectively remove the pensions and everyone that is dependent on them, you would need a time machine.

          • Comment removed based on user account deletion

            • At what point should we change their retirement plans to be inline with the rest of the country? Saying we've always done it this way isn't a reason, but an excuse.

              You do know that is for the citizens of Ohio to decide, not you, right? And not because of the selfish reason that you don't personally benefit. To be clear you want to remove other people's benefits because you do not get that benefit. You are that selffish.

              Should we change it in a decade? Maybe a century? Never?

              Again, the citizens of Ohio could change it tomorrow; however, you do understand there are thousands of people living off the benefits today, right? Thes are benefits they were promised decades ago. Removing the pensions going forward would require allo

              • Comment removed based on user account deletion
                • I answered every one. You still want entitlement of something you did not earn.
                  • Comment removed based on user account deletion
                    • I said: "Again, the citizens of Ohio could change it tomorrow; however, you do understand there are thousands of people living off the benefits today, right?"

                      You know we can just scroll up to see how dishonest this comment is, right?

                • Re: (Score:2)

                  by jm007 ( 746228 )

                  valnar, it's a waste of time making good faith efforts at discussion with this one

                  UnkleFool is on the spectrum; his acrimonious and frustrated tone, pedantic attention to non-essential details and inability to see another's viewpoint are the giveaways

                  like a pitbull on a kitten, once he chomps down on it, there's no letting go

                  your original post was fairly concise and mild to me, but wow, you sure triggered a firehose of vitriol from the more sensitive types

                  • valnar, it's a waste of time making good faith efforts at discussion with this one

                    You never answered one of my questions: Is it okay that I never have to pay for your children's education if I don't have children myself. If you need wheelchair ramps and I do not, I should not have to pay for them to be installed in public buildings. Is that okay?

                    UnkleFool is on the spectrum; his acrimonious and frustrated tone, pedantic attention to non-essential details and inability to see another's viewpoint are the giveaways

                    I saw your point. I saw it as selfish as his point.

                    like a pitbull on a kitten, once he chomps down on it, there's no letting go

                    So you are not answering one of my questions then. Got it.

                    your original post was fairly concise and mild to me, but wow, you sure triggered a firehose of vitriol from the more sensitive types

                    Yes it was concise. Selfish and concise. Everything was about him.

        • self-interest rules the day

          Hence why capitalism works so well in the real world.

          • Re: (Score:2)

            by jm007 ( 746228 )

            exactly... it's really just the harnessing of what we already do naturally

            for more info, read about 'enlightened self-interest' and Tocqueville (in case you don't already know)

    • Re:Public pensions (Score:4, Insightful)

      by GlennC ( 96879 ) on Monday November 15, 2021 @03:20PM (#61991161)

      As an Ohio public employee (as well as a taxpayer), this pension IS my retirement savings plan.

      If you want one, there are many places hiring. They may not pay as high a salary as many private employers, but they do offer pensions and other benefits.

      • Comment removed based on user account deletion

        • Re: (Score:2)

          by GlennC ( 96879 )

          There's one missing point.

          State employees don't contribute to Social Security, so they don't get a Social Security payout. The State pension is intended to take the place of the Federal Social Security benefit that Federal and private employees get.

          As for the rest, we should just look at working for the State as a calling and be grateful for whatever pittance you're willing to grant, is that it?

          • No as he stated previously: Since he personally cannot benefit, no one should. It is the same mentality that everyone must lose if he cannot win.
        • If you can't take the losses from a bad investment, then don't invest or invest conservatively. Good investments by OPERS in the past have SAVED taxpayers lots of money. That sometimes investments are bad, that's why you hire experts who do their due diligence and even then sometimes they are wrong (or, as they are claiming in this suit, the company engaged in fraud - I don't buy it in this case, but that's what they are claiming). Hey, they can't be all home runs.

          The reason states have liked pension plan
  • There should be no mistake about what really happened here. The people who run these pension funds decide where to "invest" money, and if they make a mistake and one of the big stocks they put money into goes down, they freak out and want to blame everyone other than themselves. You do NOT buy into a high-profile and expensive stock blindly, yet these people who make decisions about where to invest do just that. They try to jump on any momentum plays out there...if a stock is hyped, they jump on it an

  • "There have been several cases of exploding whale carcasses due to a buildup of gas in the decomposition process. Actual explosives have also been used to assist in disposing of whale carcasses, ordinarily after towing the carcass out to sea." - Wikipedia

      I think this describes Facebook rather well.

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