The U.S. Supreme Court is set to hear cases from Facebook and Nvidia, both seeking to dismiss federal securities fraud lawsuits. These cases could change how private lawsuits are handled against companies.
The Supreme Court’s recent rulings have limited the powers of federal regulators like the Securities and Exchange Commission (SEC), which raises concerns about holding companies accountable. Former SEC lawyer Andrew Feller believes Facebook and Nvidia may receive favorable treatment given the court’s conservative majority.
Facebook is appealing a lawsuit from investors who claim the company misled them about a 2015 data breach related to Cambridge Analytica. The investors argue that Facebook didn’t fully disclose the risks, leading to a drop in stock value. Facebook maintains that it provided forward-looking risk warnings, and the company has previously settled for $100 million with the SEC over this issue.
Nvidia is also contesting a lawsuit alleging it downplayed the influence of cryptocurrency sales on its revenue. Investors argue this misrepresentation affected their understanding of the company’s performance. Nvidia has settled related charges in the past, but now insists the plaintiffs haven’t met the legal requirements for such a suit.
Legal experts suggest that these rulings may encourage more private litigation against companies, especially as federal enforcement resources remain strained.
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