US Supreme Court set to review Facebook and Nvidia securities fraud cases

The United States Supreme Court will soon consider whether Meta’s Facebook and Nvidia can avoid federal securities fraud lawsuits in two separate cases that may limit investors’ ability to sue corporations. The tech giants are challenging lawsuits following decisions from the Ninth Circuit Court of Appeals, which allowed class actions accusing them of misleading investors to move forward. The cases will examine the power of private plaintiffs to enforce securities laws amid recent rulings that have weakened federal regulatory authority.

The Facebook case involves allegations from a group of investors, led by Amalgamated Bank, who claim the social media giant misled shareholders about a 2015 data breach linked to Cambridge Analytica, which impacted over 30 million users. Facebook argues that its disclosures on potential risks were adequate and forward-looking. Nvidia’s case, brought by Swedish investment firm E. Ohman JFonder AB, alleges that the company understated the role of crypto-related sales in its revenue growth in 2017 and 2018, misinforming investors about the volatility in its business.

Observers say these cases could further empower businesses by limiting legal risks from private litigation, especially as the US Securities and Exchange Commission (SEC) faces resource limitations. With recent Supreme Court rulings constraining regulatory bodies, private securities lawsuits may become an increasingly critical tool for investors. David Shargel, a legal expert, notes that as agencies’ enforcement powers weaken, the role of private litigation to hold companies accountable may expand.