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Lawsuit against Meta invokes modern portfolio theory to protect shareholders

corpgov.law.harvard.edu

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Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#71

Post by supernova87a »

vineyardmike wrote: post #17
supernova87a wrote: post #10

Hopefully the case gets summarily tossed for lack of standing. The idea that one company's decisions would have such tangible and personally-harmful (to "my portfolio") effects due to "negative political rhetoric, while facilitating ethnic cleansing, drug cartels, modern slavery, and vaccine disinformation" would open up every company to diffuse claims of responsibility.

As another person commented, maybe they should be open to that responsibility? > The idea that one company's decisions would have such tangible and personally-harmful effects due to "negative political rhetoric, while facilitating ethnic cleansing, drug cartels, modern slavery, and vaccine disinformation" would open up every company to diffuse claims of responsibility. Kinda scary we’re tacitly saying that IFF a comp…

I'm not saying it's ok -- I'm saying that an individual person doesn't have enough concrete, particularized, provable harm that came from the company's actions to take that company to court.

If that became the standard, everyone could sue everyone else on the thinnest of connections.

There are laws, regulators, governments, and other entities to hold such corporations to account, but it is not the individual citizen who can show a direct and concrete connection (for those kinds of harms).

I would like to sue Donald Trump for diminishing the US's standing in the world and causing my portfolio to drop as well.

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#72

Post by taneq »

hn_throwaway_99 wrote: post #7

This seems totally insane to me. The lawsuit is arguing that directors not only have a fiduciary responsibility to shareholders to increase the value of their Meta holdings, but also of other stocks they may own. 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 batte…

It's like a Lotto winner suing Lotto because their other ticket lost.

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#73

Post by spiderice »

ceejayoz wrote: post #62
xvector wrote: post #61

Earlier quoted context omitted.

> I can't remember the last time the firm produced anything interesting on the product side Quest 2, which has outsold Xbox Series X|S? Bringing E2EE to the masses via WhatsApp? Turning Instagram from some niche hipster pictures app to one of the biggest social platforms in the world?

All three of those were acquisitions, which seems to sorta prove the point.

The Quest 2 was not an acquisition. Oculus was an acquisition. Then, over 6 years later, the Quest 2 was released. Not sure anyone can claim that FB didn't have a huge role in inventing the Quest 2 after 6 years of building up to it.

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#74

Post by samatman »

rsrsrs86 wrote: post #33
flanflan wrote: post #13

I'm just a two-bit software engineer and not a lawyer but I'll go against the general flow of the rest of the posts here and say "this is interesting." Whether or not it will work is another question, but it seems like they are trying to establish some precedent that companies need to consider the downstream impacts of the things they do. I see posters here brushing off talk about mental health and political impacts…

The thing is it is hardly measurable

Not only is it measurable, Facebook measured it.

Years back, they did A/B testing to see if they could make users happy or sad.

Turns out they could. They published a blog post about it.

All subsequent mental harm their platforms do is squarely on them.

They know. They admitted it.

They should be sued out of existence.

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#75

Post by sam345 »

hn_throwaway_99 wrote: post #7

This seems totally insane to me. The lawsuit is arguing that directors not only have a fiduciary responsibility to shareholders to increase the value of their Meta holdings, but also of other stocks they may own. 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 batte…

Agreed. Totally insane - you might as well have the stock exchanges fold up and go home. What's the point in raising money in the capital markets if you are going to be subject to such silly lawsuits. Hopefully this will be thrown out quickly in the courts.

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#76

Post by divbzero »

hn_throwaway_99 wrote: post #7

This seems totally insane to me. The lawsuit is arguing that directors not only have a fiduciary responsibility to shareholders to increase the value of their Meta holdings, but also of other stocks they may own. 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 batte…

The alleged harm caused by Meta may have a lot of merit, but the portfolio argument seems insane to me too. This line of reasoning suggests that companies have a fiduciary responsibility to avoid competing too hard against competitors because they share common owners. Anticompetitive effects have already been a concern due to common ownership by index funds [1] and would be exacerbated if this portfolio argument becomes a legal standard.

[1]: https://corpgov.law.harvard.edu/2019/03/11/the-strategies-of...

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#77

Post by sam345 »

civilized wrote: post #60
pevey wrote: post #58

Earlier quoted context omitted.

I think what they are really trying to do here is come up with a legal theory that internalizes what economists call "externalities." One economic actor, in doing what is in its individual best interest, creates negative effects that may be much, much larger than the positive effects. We're not talking about Coke taking market share from Pepsi, which is analogy I saw elsewhere. A better analogy would be Company A tha…

It's nice that the lawyer may have good intentions, but the legal theory is still crackpot. I don't cheer for silly legal theories to prevail just because of good intentions. The unintended consequences of silly legal theories prevailing are likely to be higher than any good achieved in this one instance.

Normally the lawyers in these cases have one of either 2 motives - 1) idealogical (will pursue theses cases to push a political point so as to influence/intimidate others and to develop a political policy down the line) or 2) Financial. And if all things go well they get both done. Whether or not these intentions are good probably depends on whether you think freer markets should be allowed or not. Or whether they should be governed by idealogy pushing the money to one side of the political spectrum or another.

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#78

Post by acover »

ISL wrote: post #51
anigbrowl wrote: post #14

Anyone who invested in Facebook directly (rather than via a managed or exchange-traded fund of some sort) did so with the expected awareness that all the voting stock was controlled by Zuckerberg personally. Effectively, FB is a corporate dictatorship and it's hard to have sympathy for people who put money into it during the good times and are now surprised to discover that they made a bad investment decision. https:…

Largely agreed. The normal way for shareholders to express their distaste for choices made by the board/executive is to vote them out. Shareholders here literally can't do so, but they've known that from the day they bought their shares.

There is protection for minority shareholders.

I'm not sure the extent but majority owners/majority voters can't loot the company.

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#79

Post by jbombadil »

Kranar wrote: post #52
donmcronald wrote: post #38

Earlier quoted context omitted.

That’s insane! Imagine if a small company invented a cure for cancer. Would they be liable for the losses of all the pharmaceutical companies? It would be the end of innovation.

I know I should interpret every comment in good faith, but it really is hard to understand how you can read my comment and make such a reply. It feels like you didn't actually take the time to understand what I said or even read the article before commenting. At any rate, if a company found a cure for cancer the stock market would absolutely skyrocket in a way almost never before seen. It's unbelievably hard to imagi…

Legit question: is it "detriment to a generic diversified portfolio" or "detriment to a specific diversified portfolio"? (As in if my portfolio is diversified and it got decreased in value I have grounds to sue)

Re: Lawsuit against Meta invokes modern portfolio theory to protect shareholders

#80

Post by throw_m239339 »

dqpb wrote: post #48

Can litigious shareholders be countersued for the financial harm caused by self-litigating?

> Can litigious shareholders be countersued for the financial harm caused by self-litigating?

Anybody can sue everybody for anything, as long as they have the money and the time. This is how civil courts work.

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