Facebook Parent Company, CEO Zuckerberg Named in Human Trafficking, Child Exploitation Complaint

A group of pension funds and institutional investor shareholders in Facebook parent company Meta Platforms Inc. have filed a shareholder derivative suit against the company’s directors and officers concerning the use of Meta’s platforms in sex trafficking and child exploitation.

The Employees’ Retirement System of Rhode Island sued in the Delaware Court of Chancery on March 8 and released a redacted version of the filing this week. The pension fund is joined in the suit by the Cleveland Bakers and Teamsters Pension Fund, the Kiwi Investment Management Wholesale Core Global Fund and the Kiwi Investment Management Global Quantitative Fund.

The suit names Mark Zuckerberg, Facebook’s executive chairman, CEO and controlling shareholder; Sheryl Sandberg, its former chief operating officer who still sits on the company’s board; 20 other board members and executives; and Meta Platforms Inc. as defendants.

Rhode Island General Treasurer James A. Diossa said in a Tuesday statement that the pension fund alleges that Meta and its senior executives and board members “breached their fiduciary duties with respect to the rampant and systemic sex trafficking, human trafficking, and child sexual exploitation flourishing on Meta’s social media platforms, including Facebook and Instagram.”

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“Meta’s executives and board members can no longer consciously fail to address the rampant sex trafficking, human trafficking, and child sexual exploitation that the complaint alleges frequently occurred on its platforms,” said Diossa in the statement. “We are filing this lawsuit to hold them accountable for their alleged breaches of fiduciary duty, the resulting damages to the company, and to ensure that Meta implements meaningful change to address the illegal conduct occurring on its platforms.”

The complaint states that in the “shareholder derivative action, Plaintiffs, on behalf of Meta, seek to recover for the harm sustained by the Company as a result of the breaches of
fiduciary duty by the Company’s directors and officers. “

Meta did not respond to a request for comment.

Tags: Cleveland Bakers and Teamsters Pension Fund, Employees’ Retirement System of Rhode Island, Facebook, Instagram, James A. Diossa, Kiwi Investment Management Global Quantitative Fund, Kiwi Investment Management Wholesale Core Global Fund, Mark Zuckerberg, Meta

Fed Chairman Jerome Powell emphasized that the Fed is monitoring the impact of recent banking events but is still committed to reducing inflation to 2%.

The Federal Reserve Open Market Committee on Wednesday announced it would be raising rates by 25 basis points, from 4.75% to 5%. The announcement sent stocks down on the day, with indexes closing off between 1.6% and more than 2.8%.

Fed Chairman Jerome Powell strongly emphasized the Fed’s commitment to reducing inflation to 2%. During today’s press conference, Powell said that, “We will do enough to bring inflation down to 2%. Nobody should doubt that.”

“The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy,” Powell said.

Powell also acknowledged in a statement that “in the past two weeks, serious difficulties at a small number of banks have emerged.” In the Fed’s FOMC statement, it said that “recent developments,” referring to the same banking failures, can tighten access to credit. The Fed announced it will be monitoring these developments and their impact on inflation and other metrics when considering future rate increases.

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The FOMC statement also reiterated that, “The Committee is strongly committed to returning inflation to its 2% objective.”

At today’s press conference, Powell said government spending is not a large driver of inflation today, as it was during the pandemic. But in any case, Powell said he does not give advice to fiscal policymakers, and fiscal policy is something that he has to take as it comes at him.

John Lowell, a partner at October Three, an actuarial consulting firm, says, “If I were a pension sponsor right now, I don’t think I would be making any changes,” because many other market actors saw this coming and had already accounted for it. Lowell explained that increased rates generally are not good for investment returns, bonds especially, but 25 bps—which most market watchers anticipated—should not change anything drastically. He added that he would be far more concerned about the recent banking failures.

Jan Szilagyi, CEO and co-founder of Toggle, an AI-powered market analytics platform, agrees that the Fed’s move is not a big shock to markets, but it does establish that the Fed is still clearly in “inflation-fighting” mode. By “staying the course,” the Fed is also signaling that “there isn’t something ominous the Fed knows that markets may not be aware of.”

Tags: bond prices, Federal Reserve, Inflation, interest rate raises, Jerome Powell