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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.

LIA Files Lawsuit Against JPMorgan Chase

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The Libyan Investment Authority (LIA) has reportedly filed a lawsuit against JPMorgan in London, according to a spokeswoman for the country’s sovereign wealth fund. Like Libya itself, there are a number of competing factions within the LIA claiming to be the rightful custodians of the some US$ 60 billion that once resided within the fund’s accounts worldwide. With their ownership unclear, many of these accounts remain frozen under sanctions imposed by the United Nations since 2011, resulting in a number of legal battles taken up by Libyan authorities seeking to recoup and take control of the fund’s scattered assets.

The sovereign wealth fund still has its overseas assets frozen relevant to United Nations Security Council resolutions. However, the Libyan Foreign Investment Company, operating under the acronym
LAFICO, is a large sovereign wealth enterprise under LIA. It continues to run out of Tripoli Tower.

London Case

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Massive Demand is Expected as Saudi Arabia Opens Public Cinemas

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Saudi Arabia will be opening the country’s first public movie theatre in more than a generation on April 18, 2018 in collaboration with AMC Entertainment, according to an announcement from the Saudi Ministry of Culture and Information. Located in Riyadh’s King Abdullah Financial District (KAFD), the cinema complex’s debut marks the signing of a definitive agreement between the U.S.-based cinema operator and the Public Investment Fund’s (PIF) newly-incorporated Development and Investment Entertainment Company (DIEC). Marvel’s “Black Panther” will be the first movie shown publicly.

Saudi Arabia lifted a 35-year ban on public cinemas last December as part of the kingdom’s grand Vision 2030 initiative to diversify its economy away from hydrocarbon revenues and expand growth of a nascent entertainment industry, opening the doors for investment partnerships with foreign entertainment companies. In tandem with the lifting of the ban, the PIF signed a non-binding Memorandum of Understanding (MoU) with AMC – the largest cinema operator by screens in the U.S., Europe and the world – to explore a wide range of commercial opportunities.

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Why Did BlackRock Acquire Tennenbaum Capital Partners?

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Asset manager giant BlackRock Inc. signed a definitive agreement to acquire Tennenbaum Capital Partners, LLC, in a bid to strengthen its credit platform. BlackRock wants to build a larger private credit business to expand fee generation and offer clients more than just passive products. Formed in 1999, Los Angeles-based Tennenbaum Capital Partners is a firm that focuses on middle market performing credit and special situation credit opportunities. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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