The U.S. Supreme Court is set to review cases involving technology giants Meta Platforms (META, Financial) and Nvidia (NVDA) concerning potential immunity from federal securities fraud lawsuits. These decisions could make it more challenging for private plaintiffs to hold companies accountable. Recent rulings by the Court have weakened federal regulators like the SEC, suggesting the Court might further limit private plaintiffs' ability to penalize corporate misconduct under federal laws.
Both Meta and Nvidia have appealed to the Supreme Court following the Ninth Circuit Court of Appeals' decision to allow separate securities fraud class actions against them. The Court will hear arguments from Meta to dismiss a lawsuit alleging it misled investors about the 2015 Cambridge Analytica data breach. This breach affected over 30 million Facebook users and was linked to the 2016 Trump campaign's data practices. The lawsuit seeks compensation for the decline in Facebook's stock value post-disclosure.
Nvidia's case involves accusations of misleading investors about the impact of cryptocurrency sales on its revenue in 2017 and 2018. The claim, led by Stockholm-based investment firm E. Ohman J:or Fonder AB, alleges Nvidia downplayed the significance of crypto-related sales, contrary to the Securities Exchange Act requirements. Despite settling with authorities for $5.5 million, Nvidia asserts that the plaintiffs haven't met the legal standards set by the 1995 Private Securities Litigation Reform Act.
With the Supreme Court's recent decisions reducing federal regulatory power, private securities litigation might become increasingly significant for holding companies accountable.
