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Facebook’s Reckoning with Shareholders is Nigh

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As of the end of March, stock in Facebook has declined over 13% since news broke that the social media giant shared millions of users’ data without their consent with Trump-affiliated consulting firm Cambridge Analytica, a debacle that has cost the company nearly US$ 100 billion in market value, and shareholders are not happy about it. On top of the deluge in public criticism, summons from U.S. Congress, an investigation by the Federal Trade Commission (FTC) that could potentially carry hundreds of millions in penalties, and the leaking of a damning internal memo from 2016 that highlights Facebook leadership’s obsession with growth over all else, Zuckerberg et al. now face a growing number of shareholders and users who are suing the social media company for breaches of securities and privacy laws.

Over the past several weeks, 15 class action lawsuits have been brought against Facebook in U.S. federal courts related to its data-sharing practices, the majority of which have been filed in the Northern District of California. One of these lawsuits, filed by securities litigation firm Robbins Geller on behalf of purchasers of Facebook common stock, alleges that Zuckerberg and his lieutenants violated securities law and its own terms of use numerous times by misleading shareholders regarding the company’s sharing of users’ data without proper disclosures or permissions, actions that resulted in the price of Facebook’s stock being artificially inflated to a high of US$ 193 per share prior to February’s bombshell reports.

“This is a paradigmatic example of alleged securities fraud. Unfortunately, this breach of trust has consequences that extend beyond significant declines in shareholder value – it appears to have adversely impacted the integrity of our electoral process,” said Darren Robbins, a partner at the San Diego based law firm representing plaintiffs in the case. Beyond recouping financial losses, Robbins told SWFI that he hopes the case – and others like it – will prompt governmental and regulatory agencies to take a closer look at companies like Facebook that make their bread and butter at the expense of unwitting users’ privacy.

As of December 31, 2017, the 10 largest state-owned institutional investors in Facebook are Norges Bank Investment Management (0.92%), the Canada Pension Plan Investment Board (CPPIB, 0.29%), the New York State Common Retirement Fund (0.28%), the California State Teachers’ Retirement System (CalSTRS, 0.28%), the New York State Teachers’ Retirement System (0.17%) the State Board of Administration of Florida (0.14%), State of Wisconsin Investment Board (0.12%), Ohio State Teachers’ Retirement System (0.09%), the Korea Investment Corporation (KIC, 0.09%) and Korea’s National Pension Service (NPS, 0.08%).

Investors who purchased Facebook common stock between July 6, 2017 and March 23, 2018, and who wish to serve as a lead plaintiff in the Robbins Geller class action suit – captioned Bennett v. Facebook, Inc., et al., No. 18-cv-01868 -must move the court no later than 60 days from March 20, 2018.

Saudi Aramco Contemplates SABIC Stake from PIF

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Oil giant Saudi Aramco is in early discussions on whether to pursue an ownership stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund (PIF). At the moment, Saudi Aramco has no plans to buy publicly-held shares of SABIC. SABIC was founded in 1976 by Saudi royal decree to convert oil by-products into useful chemicals, polymers, and fertilizers.

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SWFI First Read, July 19, 2018

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GIC Eyes Provenance Land

GIC Private Limited is nearing a deal to purchase up to 50% of Provenance Land. Provenance Land owns India’s first Four Seasons hotel.

Eduard van Gelderen Leaves UC Regents for PSP Investments CIO Role

Eduard van Gelderen exited his position as Senior Managing Director at the University of California Regents’ Office of the Chief Investment Officer. His role will not be replaced. He accepted an offer to be Chief Investment Officer of the Public Sector Pension Investment Board (PSP Investments).

PAAMCO Prisma Holdings CEOs to Exit

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Google Fined Big Time by EU Regarding Antitrust Violations

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The European Union (EU), through its competition commissioner, levied a €4.34 billion fine against Alphabet Inc., the owner of Google. The fine is over Google having “imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search,” according to the European Commission (EC).

The European Commission is requiring Alphabet to cease from its conduct that it is accused of within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.

Commissioner Margrethe Vestager, in charge of competition policy, said in a press release, “Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans. Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine. In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”

The EC press release added, “In particular, Google: 1. has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store); 2. made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and 3. has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called “Android forks”).”

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