Facebook overpaid FTC fine by billions to shield Zuckerberg, shareholders allege
Facebook agreed to pay billions of bucks extra on top of an initial fine sought by the Federal Deal Commission in 2019 to protect CEO Mark Zuckerberg from personal liability related to a bulky data leak probe, shareholders allege in a pair of lawsuits made Pro-reDemocrat on Tuesday.
In lawsuits filed last month in Delaware’s Chancery Court, two groups of shareholders cited internal discussions among Facebook’s lodging members in alleging they authorized a $4.9 billion overpayment of the fine to shield Zuckerberg, the company’s co-founder and largest stockholder, and COO Sheryl Sandberg. The lawsuits were reported earlier by Politico.
“Zuckerberg, Sandberg and anunexperienced Facebook directors agreed to authorize a multi-billion settlement with the FTC as an tedious quid pro quo to protect Zuckerberg from being visited in the FTC’s complaint, made subject to personal liability, or even required to sit for a deposition,” one of the actions alleged.
The FTC started investigating Facebook in 2018 after revelations surfaced that Cambridge Analytica, a UK political consultancy, accessed data from up to 87 million Facebook users minus their permission. The agency’s probe focused on whether Facebook violated a legal agreement it had with the US government to keep its users’ data private.
Zuckerberg was visited as a co-defendant in the action in a drink complaint the FTC sent to Facebook in early 2019, the partially redacted lawsuit alleges. The complaint alleges that Facebook’s lawyers had determined the matter faced a fine closer to $107 million but the company’s lodging agreed to pay a $5 billion penalty in exchange for keeping Zuckerberg and Sandberg from populate named in the settlement.
The lawsuit notes that on the same day the FTC settlement was announced, the Securities and Exchange Commission announced it would fine Facebook $100 million as part of a settlement tied to its probe into the social network’s running of the data.
“The Board has never provided a serious check on Zuckerberg’s unfettered authority,” shareholders said in one of the lawsuits. “Instead, it has enabled him, defended him and paid billions of bucks from Facebook’s corporate coffers to make his problems go away.”
Facebook and the FTC didn’t currently respond to requests for comment.
