The U.S. Supreme Court is set to hear appeals from Meta's Facebook and Nvidia as they seek to dismiss separate federal securities fraud lawsuits. These cases could impact how private investors hold companies accountable for alleged misconduct.

Highlights:

• The Supreme Court may limit private lawsuits following recent rulings that weakened federal regulators.
• Facebook faces allegations related to a data breach involving Cambridge Analytica.
• Nvidia is accused of misleading investors about its revenue from cryptocurrency sales.

Facebook and Nvidia are appealing to the Supreme Court following decisions from the 9th U.S. Circuit Court of Appeals that allowed class action lawsuits to continue against them. The recent judgments of the Supreme Court have favoured business rights and led to many believing that Facebook and Nvidia may receive a sympathetic hearing.

As for Facebook, the court will consider statements made by the company to investors that the company failed to disclose a data leak affecting 87 million users in 2015 but was revealed in 2018 by Cambridge Analytica. The leak was said to have affected the records of over 30 million users and this cost Facebook lots of money by way of the stake price plummeting down.  Shareholders led by the Amalgamated Bank claimed that Facebook did not reveal this breach when discussing risks that affect the business.

Facebook argues that it did not need to reveal that risk had materialized since its disclosures were intended to be forward-looking. The company previously settled with the SEC for ₹830 crore (USD 100 million) over this issue and faced a separate ₹41,300 crore (USD 5 billion) penalty from the Federal Trade Commission.

Nvidia is also contesting a lawsuit alleging it misrepresented how much of its revenue came from the cryptocurrency market during 2017 and 2018. The plaintiffs, led by the investment firm E. Ohman J Fonder AB, claim Nvidia downplayed the importance of crypto mining, misleading investors about its financial performance.

Nvidia contends that the plaintiffs did not meet the standards for bringing such lawsuits, which are designed to prevent frivolous claims. In 2022, Nvidia paid ₹45.5 crore (USD 5.5 million) to settle similar charges regarding its disclosures.

Legal experts suggest that these cases could reshape the ability of private individuals to file securities fraud lawsuits, particularly as the SEC's enforcement power has recently been diminished. The outcomes may influence the balance between public enforcement and private litigation in corporate accountability, making it essential for the tech industry to watch closely as the Supreme Court prepares to make its decisions.