`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 1 of 96
`
`Laurence M. Rosen (SBN 219683)
`THE ROSEN LAW FIRM, P.A.
`355 South Grand Avenue, Suite 2450
`Los Angeles, CA 90071
`Telephone: (213) 785-2610
`Facsimile: (213) 226-4684
`Email: lrosen@rosenlegal.com
`
`Counsel for Plaintiff
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`
`
`
`
`
`
`
`
`
`
`Case No.:
`
`
`
`
`DEMAND FOR JURY TRIAL
`
`MARK SLOAN, derivatively on behalf of META
`PLATFORMS, INC. f/k/a FACEBOOK, INC.,
`
`
`
`
`
`
`
`
`Plaintiff,
`
`
`
`
`
`
`
`v.
`
`
`
`MARK ZUCKERBERG, DAVID M. WEHNER,
`NICK CLEGG, PEGGY ALFORD, MARC L.
`ANDREESSEN, ERSKINE B. BOWLES,
`SUSAN D. DESMOND-HELLMANN, REED
`HASTINGS, ANDREW W. HOUSTON,
`NANCY KILLEFER, ROBERT M. KIMMITT,
`SHERYL K. SANDBERG, PETER THIEL, and
`TRACEY T. TRAVIS,
`
`
`
`
`
`META PLATFORMS, INC. f/k/a FACEBOOK,
`INC.,
`
`
`
`Defendants,
`
`and
`
`Nominal Defendant.
`
`
`
`
`VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT
`
`
`
`
`
`
`
`Verified Shareholder Derivative Complaint
`
`
`

`

`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 2 of 96
`
`INTRODUCTION
`
`Plaintiff Mark Sloan (“Plaintiff”), by Plaintiff’s undersigned attorneys, derivatively and on behalf
`
`of Nominal Defendant Meta Platforms, Inc. f/k/a Facebook, Inc., (“Facebook” or the “Company”), files
`
`this Verified Shareholder Derivative Complaint against Individual Defendants Mark Zuckerberg
`
`(“Zuckerberg”), David M. Wehner (“Wehner”), Nick Clegg (“Clegg”), Peggy Alford (“Alford”), Marc L.
`
`Andreessen (“Andreessen”), Erskine B. Bowles (“Bowles”), Susan D. Desmond-Hellmann (“Desmond-
`
`Hellmann”), Reed Hastings (“Hastings”), Andrew W. Houston (“Houston”), Nancy Killefer (“Killefer”),
`
`Robert M. Kimmitt (“Kimmitt”), Sheryl K. Sandberg (“Sandberg”), Peter Thiel (“Thiel”), and Tracey T.
`
`Travis (“Travis”) (collectively, the “Individual Defendants,” and together with Facebook, the
`
`“Defendants”) for breaches of their fiduciary duties as controlling shareholder, directors and/or officers
`
`of Facebook, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and
`
`violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”),
`
`against Defendants Zuckerberg, Alford, Andreessen, Bowles, Desmond-Hellmann, Hastings, Houston,
`
`Killefer, Kimmitt, Sandberg, Thiel, and Travis for violations of Section 14(a) of the Exchange Act, and
`
`against Defendants Zuckerberg, Wehner, and Clegg for contribution under Sections 10(b) and 21D of the
`
`Exchange Act. As for Plaintiff’s complaint against the Individual Defendants, Plaintiff alleges the
`
`following based upon personal knowledge as to Plaintiff and Plaintiff’s own acts, and information and
`
`belief as to all other matters, based upon, inter alia, the investigation conducted by and through Plaintiff’s
`
`attorneys, which included, among other things, a review of the Defendants’ public documents, conference
`
`calls and announcements made by Defendants, United States Securities and Exchange Commission
`
`(“SEC”) filings, wire and press releases published by and regarding Facebook, legal filings, news reports,
`
`securities analysts’ reports and advisories about the Company, and information readily obtainable on the
`
`Internet. Plaintiff believes that substantial evidentiary support will exist for the allegations set forth herein
`
`after a reasonable opportunity for discovery.
`
`
`
`
`
`1
`Verified Shareholder Derivative Complaint
`
`
`
`
`
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 3 of 96
`
`NATURE OF THE ACTION
`
`1.
`
`This is a shareholder derivative action that seeks to remedy wrongdoing committed by
`
`Facebook’s controlling shareholder, directors, and officers from November 3, 2016, through October 21,
`
`2021 (the “Relevant Period”).
`
`
`
`2.
`
`Facebook is Delaware corporation based in California. Facebook’s products include one of
`
`the world’s most heavily used social media platforms, the eponymous Facebook, as well as Instagram, an
`
`application (“app”) for sharing photos, and Facebook Messenger and WhatsApp, apps for sending
`
`messages between users.
`
`3.
`
`Facebook primarily generates revenue by selling digital advertisement placements to those
`
`interested in advertising to the users of Facebook’s products. Moreover, Facebook collects data about its
`
`users which is of interest to advertisers and gives advertisers the ability to specifically target demographics
`
`of their choosing based on this user data.
`
`4.
`
`During the Relevant Period, the Individual Defendants caused Facebook to publicly
`
`represent that it went to great lengths to adequately moderate content, ensuring the prompt removal of
`
`illegal and harmful content, as well as any other content that was contrary to Facebook’s policies.
`
`Facebook further represented its commitment to keeping users safe and to apply its content policies
`
`uniformly across its multifaceted user base.
`
`5.
`
`However, these representations were untrue as leaked internal Company documents and
`
`the statements of Company whistleblowers would reveal.
`
`6.
`
`These sources demonstrate that Facebook’s content moderation policies, or lack thereof,
`
`cause civil unrest; assist in the commission of crimes including drug trafficking, human trafficking, and
`
`
`violent extremism; result in harm to Facebook users; and are not applied uniformly, with high profile users
`
`treated more favorably despite public representations that they would not be. Moreover, Facebook
`
`personnel were well aware of these issues before they became public knowledge, but Facebook did not
`
`correct them. Instead, believing that more active content moderation would damage the Company’s ability
`
`to generate advertising revenue, the Company chose to let these issues go substantially unaddressed.
`
`Further still, knowing of the harms posed by its products, the Company nevertheless was undertaking
`
`
`
`2
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 4 of 96
`
`efforts to target pre-teens, which the Company described as “a valuable but untapped audience,” in order
`
`to get them to engage with the Company’s products more actively (these actions collectively, the “Platform
`
`Content Misconduct”). In addition, Facebook knew that a substantial number of its accounts were fake
`
`and/or duplicates, yet improperly counted many of these accounts in measures of user activity. The
`
`
`Platform Content Misconduct and the inflated user figures made the Company appear more as if it were a
`
`more profitable and safer investment than it was, and artificially inflated the value of the Company’s
`
`securities.
`
`7.
`
`The truth began to be revealed on September 13, 2021, when the Wall Street Journal began
`
`publishing a series of articles, dubbed the “Facebook Files,” that revealed the truth concerning the
`
`Platform Content Misconduct. The “Facebook Files” cited the Company’s internal documents obtained
`
`from a whistleblower who would later reveal herself as Frances Haugen, former Facebook employee.
`
`Subsequent articles in the “Facebook Files” series were released every day through and including
`
`September 17, 2021, revealing more and more about Facebook’s deception surrounding the Platform
`
`Content Misconduct. These articles revealed , inter alia, the Company’s internal awareness of the harm
`
`its products posed to users including making “body image issues worse for one in three teen girls,” the
`
`Company’s decision to do little to nothing about this, the Company’s moderation policies applying more
`
`stringently to some users and less stringently to others (particularly high profile users), the Company’s
`
`2018 decision to alter its algorithm knowing it would lead more users to see objectionable and harmful
`
`content, the Company’s apps were being used to facilitate drug and human trafficking, and the Company’s
`
`inability to moderate content in line with its own stated policies and viewpoints. Then, on September 28,
`
`2021, the Wall Street Journal published another article regarding the Company’s targeting of pre-teens as
`
`a potential area to expand its business.
`
`8.
`
`The truth continued emerging on October 3, 2021, when the anonymous whistleblower
`
`revealed her identity in an interview on the CBS News show: 60 Minutes. She was former Facebook project
`
`manager Frances Haugen, who herself would become something of a public figure due to publicly-coming
`
`forward with her concerns. In that interview, she stated that Facebook’s actions have “shown it chooses
`
`profits over safety” and that “I don’t trust that they’re willing to actually invest what needs to be invested
`
`
`
`3
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 5 of 96
`
`to keep Facebook from being dangerous.” Following this appearance, on October 4, 2021, CBS News
`
`published an article which disclosed that the Frances Haugen had filed eight whistleblower complaints
`
`with the SEC concerning Facebook misleading the investing public.
`
`9.
`
`Then, on October 21, 2021, after the market had closed, the Wall Street Journal published
`
`
`another article concerning Facebook, again relying on the Company’s internal documents, that noted that
`
`duplicate accounts were “very prevalent” and that this phenomenon made Facebook’s publicly reported
`
`user metrics, including the ratio of daily active users, “less trustable.”
`
`10.
`
`On this news, the price of the Company’s stock dropped from $341.88 per share at the
`
`close of trading on October 21, 2021, to $324.61 at the close of trading on October 22, 2021, a drop of
`
`$17.27, or approximately 5.1%. From the market’s close on September 10, 2021 (the last trading day
`
`before the truth began emerging on September 13, 2021) to its close on October 22, 2021, the Company’s
`
`stock dropped $54.08, or approximately 14.3%.
`
`11.
`
`During the Relevant Period, the Individual Defendants breached their fiduciary duties by
`
`causing or permitting the Company to engage in the Platform Content Misconduct.
`
`12. Moreover, the Individual Defendants breached their fiduciary duties by personally making
`
`and/or causing the Company to make to the investing public a series of materially false and misleading
`
`statements about Facebook’s business, operations, and policies. Specifically, the Individual Defendants
`
`willfully or recklessly made and/or caused the Company to make false and misleading statements to the
`
`investing public that failed to disclose, inter alia, that: (1) Facebook was engaged in the Platform Content
`
`Misconduct, which included facilitating criminal activity, causing harm to users, unequally applying
`
`content moderation policies, and targeting children despite knowing the harm the Company’s products
`
`posed to them; (2) despite knowing of the Platform Content Misconduct, the Company was not engaged
`
`
`in meaningful efforts to remediate it; (3) the Company was disclosing user metrics which it knew were
`
`inflated by duplicate and fake accounts; and (4) the Company failed to maintain internal controls. As a
`
`result of the foregoing, Facebook’s public statements were materially false and misleading at all relevant
`
`times.
`
`
`
`4
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 6 of 96
`
`13.
`
`The Individual Defendants also breached their fiduciary duties by failing to correct and/or
`
`causing the Company to fail to correct these false and misleading statements and omissions of material
`
`fact to the investing public.
`
`14.
`
`Additionally, in breach of their fiduciary duties, the Individual Defendants caused the
`
`
`Company to fail to maintain adequate internal controls.
`
`15.
`
`Furthermore, during the Relevant Period while the Company’s stock was trading at
`
`artificially inflated prices due to the false and misleading statements at issue, the Individual Defendants
`
`breached their fiduciary duties by causing the Company to repurchase its own stock at artificially inflated
`
`prices, while two of the Individual Defendants breached their fiduciary duties by engaging in lucrative
`
`insider sales, obtaining collective proceeds of over $2.5 billion. From June 1, 2021 until October 31, 2021,
`
`the Company repurchased approximately 71,270,000 shares of its own stock for about $24.6 billion. Given
`
`that, during this time, the Company’s stock was only worth $324.61 per share, the price at close on October
`
`22, 2021, the Company overpaid by over $1.4 billion.
`
`16.
`
`In light of the Individual Defendants’ misconduct—which has subjected the Company to
`
`multiple federal securities fraud class action lawsuits pending in the United States District Court for the
`
`Northern District of California (the “Securities Class Actions”) including one brought by the Ohio
`
`Attorney General against the Company, its Chief Executive Officer (“CEO”), its Chief Financial Officer
`
`(“CFO”), and its Vice President of Global Affairs and Communications, and has further still subjected the
`
`Company to the need to remedy the Platform Content Misconduct, undertake internal investigations,
`
`implement adequate internal controls over its financial reporting, suffer the losses from the waste of
`
`corporate assets, and suffer the losses due to the unjust enrichment of the Individual Defendants who were
`
`improperly overcompensated by the Company and/or who benefitted from the wrongdoing alleged
`
`
`herein—the Company will have to expend many millions of dollars.
`
`17.
`
`In light of the breaches of fiduciary duty engaged in by the Individual Defendants, most of
`
`whom are the Company’s current directors, their collective engagement in fraud, the substantial likelihood
`
`of the directors’ liability in this derivative action and the CEO’s liability in the Securities Class Actions,
`
`their being beholden to each other, their longstanding business and personal relationships with each other,
`
`
`
`5
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 7 of 96
`
`and their not being disinterested and/or independent directors, a majority of Facebook’s Board of Directors
`
`(the “Board”) cannot consider a demand to commence litigation against themselves and the other
`
`Individual Defendants on behalf of the Company with the requisite level of disinterestedness and
`
`independence.
`
`
`
`JURISDICTION AND VENUE
`
`18.
`
`This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because Plaintiff’s
`
`claims raise a federal question under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b)
`
`and 78t(a)), Section 14(a) of the Exchange Act (15 U.S.C. § 78n(a)(1)), Rule 14a-9 of the Exchange Act
`
`(17 C.F.R. § 240.14a-9), and Section 21D of the Exchange Act (15 U.S.C. § 78u-4(f)).
`
`19.
`
`Plaintiff’s claims also raise a federal question pertaining to the claims made in the
`
`Securities Class Actions based on violations of the Exchange Act.
`
`20.
`
`This Court has supplemental jurisdiction over Plaintiff’s state law claims pursuant to 28
`
`U.S.C. § 1367(a).
`
`21.
`
`This derivative action is not a collusive action to confer jurisdiction on a court of the United
`
`States that it would not otherwise have.
`
`22.
`
`Venue is proper in this District pursuant to 28 U.S.C. §§ 1391 and 1401 because a
`
`substantial portion of the transactions and wrongs complained of herein occurred in this District,
`
`Defendants have conducted business in this District, and Defendants’ actions have had an effect in this
`
`District, and Facebook is headquartered in this District.
`
`PARTIES
`
`Plaintiff
`
`23.
`
`
`Plaintiff is a current shareholder of Facebook common stock. Plaintiff has continuously
`
`held Facebook common stock at all relevant times.
`
`Nominal Defendant Facebook
`
`24.
`
`Facebook is a Delaware corporation with its principal executive offices located at 1601
`
`Willow Road, Menlo Park, CA 94025. Facebook’s shares trade on the NASDAQ under the ticker symbol
`
`“FB.”
`
`
`
`6
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 8 of 96
`
`Defendant Zuckerberg
`
`25.
`
`Defendant Zuckerberg founded the Company in 2004 and has served as the Company’s
`
`CEO since then. From 2012 onward, he has been Chairman of the Board. According to the Company’s
`
`proxy statement filed on Schedule 14A with the SEC on April 9, 2021 (the “2021 Proxy Statement”), as
`
`
`of March 31, 2021, Defendant Zuckerberg beneficially owned 2,770,698 shares of the Company’s Class
`
`A common stock and 359,924,464 shares of the Company’s Class B common stock,1 with voting control
`
`over an additional 32,595,276 shares of the Company’s Class B common stock. Thus, taken together,
`
`Defendant Zuckerberg has voting control over 57.7% of the Company’s total voting power, making him
`
`a controlling shareholder. Given that the price per share of the Company’s common stock at the close of
`
`trading on March 31, 2021 was $294.53, Defendant Zuckerberg beneficially owned approximately $107
`
`billion worth of Facebook stock.
`
`26.
`
`For the fiscal year ended December 31, 2020 (the “2020 Fiscal Year”), Defendant
`
`Zuckerberg received $25,288,265 in total compensation from the Company. This included $1 in salary
`
`and $25,288,264 in other compensation, consisting of the costs of providing Defendant Zuckerberg with
`
`private security and costs associated with Defendant Zuckerberg’s personal use of private aircraft. For the
`
`fiscal year ended December 31, 2019 (the “2019 Fiscal Year”), Defendant Zuckerberg received
`
`$23,415,973 in total compensation from the Company. This included $1 in salary and $23,415,972 in
`
`other compensation, consisting of the costs of providing Defendant Zuckerberg with private security and
`
`costs associated with Defendant Zuckerberg’s personal use of private aircraft. For the fiscal year ended
`
`December 31, 2018 (the “2018 Fiscal Year”), Defendant Zuckerberg received $22,554,543 in total
`
`compensation from the Company. This included $1 in salary and $22,554,542 in other compensation,
`
`consisting of the costs of providing Defendant Zuckerberg with private security and costs associated with
`
`
`Defendant Zuckerberg’s personal use of private aircraft. For the fiscal year ended December 31, 2017 (the
`
`“2017 Fiscal Year”), Defendant Zuckerberg received $8,852,366 in total compensation from the
`
`
`1 Holders of Class B common stock are entitled to ten votes per share compared to Class A common
`stock’s one vote per share. Class B common stock automatically converts into Class A common stock if
`transferred under most circumstances, including an arms-length sale, and so is treated the same as Class
`A common stock herein for the purpose of calculating value.
`
`
`
`7
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 9 of 96
`
`Company. This included $1 in salary and $8,852,365 in other compensation, consisting of the costs of
`
`providing Defendant Zuckerberg with private security and costs associated with Defendant Zuckerberg’s
`
`personal use of private aircraft. For the fiscal year ended December 31, 2016 (the “2016 Fiscal Year”),
`
`Defendant Zuckerberg received $5,765,832 in total compensation from the Company. This included $1 in
`
`
`salary and $5,765,831 in other compensation, consisting of the costs of providing Defendant Zuckerberg
`
`with private security and costs associated with Defendant Zuckerberg’s personal use of private aircraft.
`
`27.
`
`During the period when the Company materially misstated information to the investing
`
`public to keep the stock price inflated, and before the scheme was exposed, Defendant Zuckerberg made
`
`the following sales of company stock at artificially inflated prices:
`
`Date
`
`Shares Sold
`
`Avg. Price Per Share
`
`Proceeds
`
`April 29, 2021
`
`April 30, 2021
`
`May 3, 2021
`
`May 26, 2021
`
`May 27, 2021
`
`June 2, 2021
`
`68,000
`
`68,000
`
`68,000
`
`52,700
`
`77,300
`
`63,105
`
`$326.62
`
`$327.17
`
`$325.46
`
`$327.94
`
`$330.36
`
`$329.64
`
`$22,210,364
`
`$22,247,220
`
`$22,131,008
`
`$17,282,385
`
`$25,536,673
`
`$20,801,679
`
`$25,455,199
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`June 4, 2021
`
`June 8, 2021
`
`June 9, 2021
`
`June 10, 2021
`
`June 11, 2021
`
`
`
`June 14, 2021
`
`June 15, 2021
`
`June 16, 2021
`
`June 17, 2021
`
`June 21, 2021
`
`June 22, 2021
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`$329.30
`
`$335.36
`
`$333.42
`
`$331.63
`
`$331.11
`
`$333.69
`
`$337.73
`
`$333.21
`
`$334.32
`
`$330.42
`
`$336.25
`
`$25,923,173
`
`$25,773,056
`
`$25,634,689
`
`$25,594,725
`
`$25,794,005
`
`$26,106,838
`
`$25,757,287
`
`$25,842,626
`
`$25,541,234
`
`$25,992,202
`
`8
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 10 of 96
`
`June 24, 2021
`
`June 25, 2021
`
`July 1, 2021
`
`July 2, 2021
`
`July 6, 2021
`
`July 7, 2021
`
`July 8, 2021
`
`July 9, 2021
`
`July 12, 2021
`
`July 13, 2021
`
`July 14, 2021
`
`July 15, 2021
`
`July 16, 2021
`
`
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`$343.48
`
`$341.99
`
`$350.82
`
`$354.68
`
`$354.04
`
`$353.47
`
`$345.64
`
`$348.28
`
`$352.37
`
`$352.31
`
`$350.92
`
`$344.46
`
`$343.15
`
`$337.46
`
`$26,551,158
`
`$26,436,058
`
`$27,118,231
`
`$27,416,609
`
`$27,367,369
`
`$27,323,153
`
`$26,717,662
`
`$26,922,121
`
`$27,237,969
`
`$27,233,717
`
`$27,125,806
`
`$26,627,144
`
`$26,525,649
`
`$26,086,044
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`July 19, 2021
`
`July 20, 2021
`
`July 21, 2021
`
`July 22, 2021
`
`July 23, 2021
`
`July 23, 2021
`
`July 23, 2021
`
`July 26, 2021
`
`
`
`July 27, 2021
`
`July 28, 2021
`
`July 29, 2021
`
`July 30, 2021
`
`August 2, 2021
`
`August 3, 2021
`
`77,300
`
`77,300
`
`77,300
`
`6,300
`
`56,000
`
`15,000
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`$339.27
`
`$344.19
`
`$348.53
`
`$366.67
`
`$366.76
`
`$366.22
`
`$371.77
`
`$368.96
`
`$372.33
`
`$361.00
`
`$357.20
`
`$354.88
`
`$350.60
`
`$26,225,339
`
`$26,605,655
`
`$26,941,446
`
`$2,310,027
`
`$20,538,840
`
`$5,493,300
`
`$28,738,207
`
`$28,520,839
`
`$28,781,418
`
`$27,905,454
`
`$27,611,714
`
`$27,431,992
`
`$27,101,380
`
`9
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 11 of 96
`
`August 4, 2021
`
`August 5, 2021
`
`August 6, 2021
`
`August 9, 2021
`
`August 10, 2021
`
`August 11, 2021
`
`August 12, 2021
`
`August 13, 2021
`
`August 16, 2021
`
`August 17, 2021
`
`August 18, 2021
`
`August 19, 2021
`
`August 20, 2021
`
`
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`$356.21
`
`$360.61
`
`$363.48
`
`$363.33
`
`$361.90
`
`$360.19
`
`$360.41
`
`$363.15
`
`$362.38
`
`$360.15
`
`$357.81
`
`$354.77
`
`$357.41
`
`$362.51
`
`$27,534,878
`
`$27,875,153
`
`$28,097,004
`
`$28,085,640
`
`$27,974,715
`
`$27,842,377
`
`$27,860,002
`
`$28,071,881
`
`$28,012,205
`
`$27,839,672
`
`$27,658,635
`
`$27,423,875
`
`$27,627,715
`
`$28,022,023
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`August 23, 2021
`
`August 24, 2021
`
`August 25, 2021
`
`August 26, 2021
`
`August 27, 2021
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`August 30, 2021
`
`6,300
`
`August 30, 2021
`
`August 31, 2021
`
`71,000
`
`77,300
`
`
`
`September 1, 2021
`
`77,300
`
`September 2, 2021
`
`77,300
`
`September 3, 2021
`
`77,300
`
`September 7, 2021
`
`77,300
`
`September 8, 2021
`
`77,300
`
`September 9, 2021
`
`77,300
`
`$365.35
`
`$368.33
`
`$366.94
`
`$369.60
`
`$376.28
`
`$376.14
`
`$380.74
`
`$381.94
`
`$377.69
`
`$375.28
`
`$378.47
`
`$377.96
`
`$378.31
`
`$28,241,477
`
`$28,471,831
`
`$28,364,462
`
`$28,570,389
`
`$2,370,582
`
`$26,706,152
`
`$29,431,202
`
`$29,523,730
`
`$29,195,668
`
`$29,009,221
`
`$29,255,499
`
`$29,216,230
`
`$29,243,363
`
`10
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 12 of 96
`
`September 10, 2021
`
`77,300
`
`September 13, 2021
`
`77,300
`
`September 14, 2021
`
`77,300
`
`September 15, 2021
`
`77,300
`
`
`
`September 16, 2021
`
`77,300
`
`September 17, 2021
`
`77,300
`
`September 20, 2021
`
`71,000
`
`September 20, 2021
`
`6,300
`
`September 21, 2021
`
`77,300
`
`September 22, 2021
`
`77,300
`
`September 23, 2021
`
`77,300
`
`September 24, 2021
`
`6,300
`
`September 24, 2021
`
`71,000
`
`77,300
`
`$380.96
`
`$377.70
`
`$377.21
`
`$372.59
`
`$371.85
`
`$366.49
`
`$355.46
`
`$354.99
`
`$357.95
`
`$345.12
`
`$346.48
`
`$348.95
`
`$349.22
`
`$351.24
`
`$29,447,898
`
`$29,196,519
`
`$29,158,333
`
`$28,801,052
`
`$28,744,159
`
`$28,329,754
`
`$25,237,731
`
`$2,236,437
`
`$27,669,457
`
`$26,677,853
`
`$26,783,135
`
`$2,198,403
`
`$24,794,904
`
`$27,150,542
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`September 27, 2021
`
`September 28, 2021
`
`77,300
`
`September 29, 2021
`
`77,300
`
`September 30, 2021
`
`77,300
`
`October 1, 2021
`
`October 4, 2021
`
`October 4, 2021
`
`October 5, 2021
`
`
`
`October 6, 2021
`
`October 7, 2021
`
`October 8, 2021
`
`October 11, 2021
`
`October 13, 2021
`
`77,300
`
`54,504
`
`4,800
`
`77,300
`
`77,300
`
`75,761
`
`77,193
`
`57,750
`
`52,700
`
`October 14, 2021
`
`52,900
`
`$344.17
`
`$342.21
`
`$340.76
`
`$342.11
`
`$329.35
`
`$329.36
`
`$331.28
`
`$330.51
`
`$333.91
`
`$331.45
`
`$328.16
`
`$325.02
`
`$328.73
`
`$26,604,109
`
`$26,452,987
`
`$26,341,134
`
`$26,445,180
`
`$17,951,110
`
`$1,580,913
`
`$25,607,943
`
`$25,548,345
`
`$25,297,128
`
`$25,585,465
`
`$18,951,066
`
`$17,128,817
`
`$17,389,869
`
`11
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 13 of 96
`
`October 15, 2021
`
`October 18, 2021
`
`October 19, 2021
`
`October 20, 2021
`
`October 21, 2021
`
`52,700
`
`77,300
`
`77,300
`
`77,300
`
`77,300
`
`
`
`$325.89
`
`$332.17
`
`$339.60
`
`$341.67
`
`$340.05
`
`$17,174,350
`
`$25,676,431
`
`$26,251,157
`
`$26,411,322
`
`$26,286,019
`
`Thus, in total, before the fraud was exposed, he sold 7,318,613 Company shares at artificially inflated
`
`prices on inside information, for which he received approximately $2.57 billion. His insider sales made
`
`with knowledge of material nonpublic information before the material misstatements and omissions were
`
`exposed demonstrate his motive in facilitating and participating in the scheme.
`
`28.
`
`The 2021 Proxy Statement described Defendant Zuckerberg’s “Skills and Qualifications”
`
`as follows:
`• Extensive leadership, entrepreneurship, global business, technology, and product
`innovation and development experience, as well as in-depth knowledge of our
`company and experience with the dynamics of our industry, through service as our
`Founder, Chief Executive Officer, and Chairman of our board of directors
`
`Defendant Wehner
`
`29.
`
`Defendant Wehner has served as the Company’s CFO since June 2014. According to the
`
`2021 Proxy Statement, as of March 31, 2021, Defendant Wehner beneficially owned 64,323 shares of the
`
`Company’s Class A common stock. Given that the price per share of the Company’s common stock at the
`
`close of trading on March 31, 2021 was $294.53, Defendant Wehner owned approximately $18.9 million
`
`worth of Facebook stock.
`
`30.
`
`For the 2020 Fiscal Year, Defendant Wehner received $16,141,237 in total compensation
`
`from the Company. This included $823,846 in salary, $849,592 as a bonus, $14,370,187 in stock awards,
`
`and $97,612 in all other compensation. For the 2019 Fiscal Year, Defendant Wehner received $21,334,036
`
`in total compensation from the Company. This included $785,385 in salary, $809,928 as a bonus,
`
`$19,678,923 in stock awards, and $59,800 in all other compensation. For the 2018 Fiscal Year, Defendant
`
`Wehner received $19,686,113 in total compensation from the Company. This included $753,846 in salary,
`
`$499,494 as a bonus, $18,423,523 in stock awards, and $9,250 in all other compensation. For the 2017
`
`
`
`12
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case 4:22-cv-00903-KAW Document 1 Filed 02/14/22 Page 14 of 96
`
`Fiscal Year, Defendant Wehner received $22,426,287 in total compensation from the Company. This
`
`included $711,539 in salary, $633,317 as a bonus, $21,072,431 in stock awards, and $9,000 in all other
`
`compensation. For the 2016 Fiscal Year, Defendant Wehner received $16,544,275 in total compensation
`
`from the Company. This included $662,692 in salary, $940,421 as a bonus, $14,931,596 in stock awards,
`
`
`and $9,566 in all other compensation.
`
`31.
`
`During the period when the Company materially misstated information to the investing
`
`public to keep the stock price inflated, and before the scheme was exposed, Defendant Wehner made the
`
`following sales of Company stock at artificially inflated prices:
`
`Date
`
`Shares Sold
`
`Avg. Price Per Share
`
`Proceeds
`
`April 29, 2021
`August 15, 2021
`August 18, 2021
`
`16,000
`1,545
`9,607
`
`$330.10
`$363.18
`$356.10
`
`$5,281,600
`$561,113
`$3,421,052
`
`Thus, in total, before the fraud was exposed, he sold 27,152 Company shares at artificially inflated prices
`
`on inside information, for which he received approximately $9.3 million. His insider sales made with
`
`knowledge of material nonpublic information before the material misstatements and omissions were
`
`exposed demonstrate his motive in facilitating and participating in the scheme.
`
`32.
`
`The 2021 Proxy Statement listed Defendant Wehner’s “Experience” as follows:
`
`Facebook, Inc.
`Chief Financial Officer (2014-present)
`Vice President, Corporate Finance and Business Planning (2012-2014)
`
`Zynga Inc.
`Chief Financial Officer (2010-2012)
`
`Allen & Company
`
`Managing Director (2006-2010)
`Director (2005-2006)
`Various other positions (2001-2005)
`
`Defendant Clegg
`
`33.
`
`Defendant Clegg has served as the Company’s Vice President of Global Affairs and
`
`Communications since October 2018.
`
`
`
`13
`Verified Shareholder Derivative Complaint
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`
`2
`