Shareholder sues Facebook, CEO Zuckerberg after $120 billion stock plunge
In what could be the first of many lawsuits over Facebook's disappointing earnings announcement, Facebook shareholder James Kacouris, has filed a suit against Facebook, CEO Mark Zuckerberg, and CFO David Wehner for allegedly making misleading statements about Facebook's slowing revenue growth, falling operating margins, and declining users.
Meanwhile, another activist shareholder has filed a proposal calling for Zuckerberg's removal.
Facebook in a soup as shareholders rage
Looking back at Facebook's darkest day
Following Facebook's recent earnings announcement that projected sluggish revenue growth in the months to come, the company's shares plunged by as much as 24%, wiping out over $120bn of shareholder wealth in the company. Zuckerberg himself lost over $16bn.
Details of the lawsuit against Zuckerberg and co
While it's fairly common for shareholders in the US to sue companies following unexpected stock price drops, Kacouris alleged that the sharp decline in Facebook stocks was the result of federal securities law violations by the Zuckerberg and co.
Kacouris sought class-action and unspecified damages from the defendants.
When prodded, a Facebook spokeswoman declined to comment on the lawsuit.
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Details about the proposal calling for Zuckerberg's removal
Meanwhile, activist investor Trillium Asset Management, which had earlier locked horns with Zuckerberg, filed a proposal calling for his removal, just hours after Facebook released its earnings report.
Trillium, which holds an $11mn stake in Facebook, cited the social media giant's "mishandling" of several crises and called for his removal as chairman.
Notably, this isn't the first time shareholders have moved against Zuckerberg.
Will it work?
Will Trillium's proposal work? It's pretty unlikely
Last year, 51% of Facebook's independent shareholders had called for the removal of Zuckerberg, but their proposal had failed owing to him having the majority of voting power, thanks to his Class B shares.
Given this fact, it's unlikely that Trillium's proposal will gain enough traction.
However, given the frustration following Facebook's share slump, Trillium might be able to get several others on board.
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