In a significant legal development, the US Supreme Court has dismissed an appeal by Facebook, now known as Meta Platforms, in a securities fraud lawsuit. This case, which has its roots in the infamous Cambridge Analytica data breach, accused Facebook of misleading investors about the misuse of user data. The Supreme Court's decision, delivered in a succinct one-line order, leaves in place a lower court ruling that allows the lawsuit to proceed.

The lawsuit, led by Amalgamated Bank, centers on allegations that Facebook failed to disclose the full extent of a 2015 data breach involving Cambridge Analytica, a British political consulting firm. This breach affected over 30 million Facebook users and was used to influence the 2016 US presidential election. The plaintiffs argue that Facebook's risk disclosures in its 2016 SEC filings were misleading, as they portrayed the risk of data misuse as hypothetical, despite the breach having already occurred.

The Supreme Court's dismissal of the appeal means that Facebook will face the class action lawsuit, which seeks damages for the decline in Facebook's stock value following revelations about the data breach in 2018. The case highlights ongoing legal challenges for Facebook regarding its data privacy practices and the obligations of publicly traded companies to disclose material risks to investors.

This decision marks the Supreme Court's first opinion of the term and underscores the complexities of securities law, particularly concerning the disclosure of past events that may not pose ongoing risks. The Biden administration supported the shareholders, arguing that it is misleading to describe an event that has already occurred as a potential future risk.

The outcome of this case could have broader implications for how companies disclose risks in their financial filings, potentially leading to more stringent requirements for transparency in the wake of past incidents.