The controversy over what Facebook has said about social and emotional hazards stemming from its products could become a test of the Securities and Exchange Commission's growing interest in policing corporate risks that hurt reputations more than profits.
Apparently, the Securities and Exchange Commission is investigating whether Facebook adequately warned investors that developers and other third parties may have obtained users’ data without their permission or in violation of Facebook’s policies. The Securities and Exchange Commission’s probe of the social-media company, first reported in early July 2018, follows revelations that Cambridge Analytica, a data-analytics firm that had ties to President Donald Trump’s 2016 campaign, got access to information on millions of Facebook users.
Three US public companies identified as Chinese hacking victims didn’t report the theft of trade secrets and other data to investors, despite rules designed to disclose significant events.
Two of the companies -- aluminum maker Alcoa and metals supplier Allegheny Technologies -- said the thefts weren’t “material” to their businesses and therefore don’t have to be disclosed under Securities and Exchange Commission rules designed to give investors information that may affect share prices.
Scott Kimpel, a lawyer who previously worked on disclosure rules as a member of the SEC’s executive staff, said there is “a gray area where a lot of the companies are not perfectly clear on what they should be disclosing.”