The consequences of that line of thinking are scary. I'm sure the vast majority of shareholders of most US companies own ICE cars. If a company decides to put a lot of effort into, for example, cheaper batteries, could shareholders sue because the company is devaluing an asset most of them own?

This totally smells like a lawyer trying a random, BS theory in the hope that something "sticks" in order to make their mark.

https://www.morningstar.com/articles/1061237/how-facebook-si...

Suing Zuckerberg on the basis that FB has made the world a worse place is one thing, suing him on the basis that a corporate dictatorship has disrupted their portfolio is a joke. They'd be better off suing the SEC or FTC for failure to regulate effectively.

I see posters here brushing off talk about mental health and political impacts from decisions corporate directors make. Well if there is a measurable harm that can be traced back to a given company why shouldn't they be sued?

It's a meme, but we live in a society. Companies don't exist in isolation, neither do profits.

Because Mark Z. is not diversified (wealth is in Meta) and has total control over the company, his decisions create a conflict of interest to the modern investor.

Yet the article doesnt mention how his decisions directly impacted the economy. Maybe the lawsuit does, but Im not going to read that...

>the fiduciary implication of the fact that modern investors are generally diversified, so that their interests extend beyond (and may be in opposition to) the maximization of the value of future cash flows to be received from owning a company’s shares.

So it's fighting monopolistic behavior?

It claims that it hurt a typical diversified portfolio. One that FB shareholders should have, according to the Modern Portfolio Theory (MPT). It notes that the MPT is not only commonly accepted, it is in fact used to write laws and regulations: "Before the advent of MPT, “legal lists” prohibited many fiduciaries from owning common stock".

So if the MPT is indeed a cornerstone of modern economics, and modern laws, the natural conclusion is that it should be considered when looking at the fiduciary consequences of a company decision.

Facebook case shows the problem very clearly, because both of the scale of the impact of the company on the World in general, and the structure of its governance, where the majority vote holder interests are not diversified, which makes them diverge significantly from all the other shareholders interests.

As I understand it, it's a bit of legal jiu-jitsu: it takes the MPT, which so far has been used to allow more actors to invest in stocks, and so accepted readily by business and legal actors. It then uses it to extend the responsibility of companies to some externalities.

It may or may not succeed, but it doesn't seem completely insane. At the very least the discovery process could be used to show to which extend Facebook knows about features that have a clearly negative effect on society in general, and chooses to implement them anyway.

It is important to note two things that the complaint does not claim. First, it does not claim that stakeholders (e.g., users of its platforms or citizens of destabilized countries) are owed fiduciary duties, or that harm to these stakeholders in and of itself constitutes a fiduciary breach.

Secondly, the complaint does not allege that this conduct was bad for Meta’s own finances.

Instead, the complaint alleges that the conduct revealed by Haugen threatens the global economy, and consequently the portfolios of the Company’s diversified shareholders. The complaint explains:

Meta is the largest social media network company in the world, with 3.5 billion users—43% of humanity. Its business decisions inevitably create financial impact well beyond its own cash flows and enterprise value and have significant impacts on the global economy. While defendants have a duty to operate the Company as a business for the financial benefit of its stockholders, those stockholders are often diversified investors with portfolio interests beyond Meta’s own financial success.

If the decisions that maximize the Company’s long-term cash flows also imperil the rule of law or public health, the portfolios of its diversified stockholders are likely to be financially harmed by those decisions.""

I realize in this case it's effectively one subset if shareholders trying to get paid at the expense of other shareholders but it feels like there should be a higher bar for this type of litigation.

> The complaint alleges that the Meta directors failed to consider that shareholders with diversified portfolios may be subject to net losses from Meta’s pursuit of a business model that maximizes advertising revenue without regard to the harms it inflicts on the rest of their portfolios. In particular, the complaint identifies press reports establishing that the company knew that its conduct was leading to mental health issues for millions of users and increasingly negative political rhetoric, while facilitating ethnic cleansing, drug cartels, modern slavery, and vaccine disinformation. These activities pose risks to political stability, public health, and rule of law, threatening the intrinsic value of the global economy and thus the value of diversified portfolios.

Is there any company in existence that would clear this bar?

Basically this is investors saying they are concerned that they are having to bear some of the externalized costs of Facebook’s business.

Traditionally, businesses have been more careful to target those externalities at folks in the third world, or at the very least in poor parts of the state, and avoided impacting the investing classes.

Show me an investor complaining about Facebook’s corporate governance

And I’ll show you someone who doesn’t think investment decisions through

They can be sued if there is a specific, measurable harm. And there are plenty of existing laws which facilitate this.

Not aware of any evidence this applies to Meta.

Instead, the lawsuit is trying to expand the concept of "fiduciary duty" to other aspects of shareholders lives. That is the part that a lot of us think is insane.

Say I overhear my neighbors talking with each other. Despite my not knowing them, if based on listening to their conversation I decid to go kill some people at my place of employment - that is on me. My neighbors do not bear any responsibility. At some point there is the concept of personal responsibility. Honestly, this should be obvious.

I doubt they’ll win this one but if they do it would be hilariously amusing.

What I gathered, is that the facebook decisions impacted non-facebook stocks, facebook not only should have known but also are responsible as fiduciary to the stock holders.

In short, besides you, I bought your competitor, you should have known I bought them, your actions now crushed your competitor, I lost a boatload on them, you are responsible.

> The complaint alleges that the Meta directors failed to consider that shareholders with diversified portfolios may be subject to net losses from Meta’s pursuit of a business model that maximizes advertising revenue without regard to the harms it inflicts on the rest of their portfolios. In particular, the complaint identifies press reports establishing that the company knew that its conduct was leading to mental health issues for millions of users and increasingly negative political rhetoric, while facilitating ethnic cleansing, drug cartels, modern slavery, and vaccine disinformation. These activities pose risks to political stability, public health, and rule of law, threatening the intrinsic value of the global economy and thus the value of diversified portfolios. (As diversified portfolios represent a slice of the economy, reducing the value of the global economy inevitably reduces portfolio value.