Facebook Faces Shareholders Lawsuit Over Video Metrics

Facebook faces Shareholders Lawsuit Over Video Metrics

A shareholder filed putative class action suit last week in California federal court claiming that the social media giant Facebook made misleading statements in regards to the amount of time users spend watching video ads. The Facebook lawsuit stated that the disclosure of that information caused Facebook’s stock price to drop.

The shareholder in the Facebook shareholders lawsuit, Daniel Anshen, claimed that the company used a flawed metric to determine how long users were watching video ads online. According to the lawsuit, Facebook’s acknowledgment of its error in September 2016 caused shareholders who purchased stock between May 5, 2014, and Dec. 9, 2016, to suffer a loss. Also according to the complaint, much of Facebook’s growth between the dates in question was the result of paid advertisements targeting its users. In order to entice advertisers to buy placements, data was provided to induce ad purchases based on flawed metrics.

Instead of providing information that reflected total time ads were watched divided by the number of viewers, Facebook calculated its data by the total time spent watching a video divided by the number of views lasting at least three seconds long. As a result, the average time users spent watching video advertisements allegedly was overestimated by between 60-80 percent. The shareholder is now claiming that share prices dropped when the truth came out.

According to the complaint in the shareholders lawsuit, Facebook’s stock price dropped twice in relation to the flawed metric: the first was last September upon discovery and disclosure of the error, causing a $2.77 (2.12%) drop. The second occurred in mid-November, when Facebook’s press release claimed it would update its metrics. After the announcement shares fell an additional $.86.

The shareholder in the Facebook lawsuit is claiming that the company and its top executives “knowingly and recklessly participated in a scheme to defraud plaintiffs” by knowingly publicizing an incorrect metric and failing to disclose it to potential advertisers.

Call a Los Angeles Securities Attorney Today

If you invested in Facebook, or are a shareholder in another company that you believe is being mismanaged or in a shareholder lawsuit, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities attorney today for a consultation to discuss your rights and options.

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Solar panels from SunPower Corporation against a blue sky

SunPower Corporation Accused of Insider Trading

A solar panel maker found itself facing a lawsuit after being accused by investors of insider trading and making misleading statements to shareholders, causing its stock price to drop dramatically.

SunPower Corporation and two of its executives face charges stating that for nearly six months the company misled investors about its faltering financial outlook until it was forced to adjust downward, causing stock prices to fall 30 percent in one day.
Trustees of the police and fire retirement system of Warren, Michigan, brought the investor suit, claiming that the company’s misleading statements caused share prices to drop from $14.78 to $10.31, and accused the two executives of dumping $1.2 million in stock in advance of the company’s negative announcement.

According to the lawsuit, executives of SunPower Corporation knew or disregarded the negative factors impacting the company’s business prospects as early as the beginning of 2016, breaching their fiduciary duty to their shareholders by continuing to cast a positive light on their performance for several months.

On August 9, the company filed statements claiming that several “near-term challenges” were expected to impact their business and financial performance. Further bolstering the plaintiffs’ argument was a statement made by CEO Tom Werner, claiming they knew of the problems as early as May 2016. Company CFO Charles Boynton made statements as late as May, highlighting SunPower’s expectation of exceeding its financial forecast.

SunPower Corporation shareholders argue that despite executives’ rosy outlook, demand decreased while project completion timelines increased, and the company was preparing to downsize. More importantly, the projections are alleged to have kept stock prices artificially high, only dropping once the truth came out.

The suit seeks monetary damages and fees and for SunPower Corporation to reform its business structure. A separate class action was filed in August, which contains similar securities-related charges.

Call a Los Angeles Securities Fraud Attorney Today

If you invested in SunPower Corporation, or believe you have suffered a loss as a result of misstatements or omissions of fact made by a company that you own stock in, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles stock fraud attorney today for a consultation to discuss your rights and options.

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