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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.

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Norway GPFG Excludes More Companies, 2 For Coal and 1 for Working Conditions in Vietnam

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Norway Government Pension Fund Global will not be able to invest in three more companies as decided by Norges Bank. In a statement by Norges Bank Investment Management (NBIM), Texwinca Holdings Co, Evergy Inc, and Washington H. Soul Pattinson & Co Ltd., were removed from the sovereign wealth fund’s portfolio.

Texwinca Holdings Co is a Hong Kong-based investment holding company that is engaged in activities such as knitted fabric and apparel businesses. Norges Bank excluded this firm over its view on an unacceptable risk that the company is responsible for serious or systematic human rights violations. Texwinca owns 50% of the shares in Megawell Industrial Ltd, making it that company’s largest shareholder. Megawell owns the garment factories Hugo Knit and Kollan in Vietnam as wholly owned subsidiaries. Texwinca claims that it does not have a controlling influence over Megawell and is not responsible for the working conditions at Megawell’s factories in Vietnam, according to a finding by Norway GPFG’s Council on Ethics.

Evergy is an investor owned electric utility headquartered in Kansas City, Missouri, United States. Evergy is the largest electric company in Kansas. Norges Bank excluded this firm based on an assessment of the product-based coal criterion.

Washington H. Soul Pattinson and Company Limited is an Australian conglomerate founded by businessman Lewy Pattinson. Norges Bank excluded this firm based on an assessment of the product-based coal criterion.

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CPPIB and Insight Invest $500 Million in Swiss Data Recovery and Backup Company

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Baar, Switzerland-based Veeam Software locked in US$ 500 million in investment from Insight Venture Partners and the Canada Pension Plan Investment Board (CPPIB). Founded in 2006, Veeam Software is a provider of data management solutions, such as backup and data recovery solutions, for the public and private cloud. Veeam Software claims it has roughly US$ 1 billion in sales last year and more than 325,000 customers. Insight Venture Partners acquired a minority stake in Veeam back in 2013.

Pursuant to the terms of this investment, Insight Venture Partners’ Managing Director, Michael Triplett, will join Veeam’s board of directors.

Gordon R. Caplan, Co-Chairman of Willkie Farr & Gallagher LLP, served as advisor for the deal.

Some of Veeam’s competitors include Palo Alto-based Rubrik, which in January raised US$ 261 million in a Series E funding round from investors such as Khosla Ventures, Greylock Partners, Lightspeed Venture Partners, IVP, and Bain Capital Ventures.

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Korea’s NPS Plants Stewardship Responsible Unit

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The National Pension Service of Korea formed a division to comply with its adoption of stewardship principles that were revealed in July 2018. The pension promoted its 9-member team of responsible investment professionals to the global responsibility investment and governance division in late December 2018. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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