Facebook to pay $100m fine over Cambridge Analytica’s misuse of users’ data
Meanwhile, Facebook has also agreed to pay a record $5bn penalty to resolve a related case brought by the Federal Trade Commission
Washington/New York — Facebook will pay $100m to resolve US Securities and Exchange Commission (SEC) claims that the social networking giant misled investors about the misuse of account holders’ data, adding to the litany of fines against the firm over privacy violations.
Even though Facebook was aware by late 2015 that an outside developer had been misusing information gathered from its customers, the company publicly downplayed any risk of the data being handled in violation of its rules as “merely hypothetical”, the SEC said in a statement on Wednesday.
The allegations relate to data obtained by Cambridge Analytica, a consulting firm hired by US President Donald Trump’s 2016 campaign.
Facebook’s settlement with the SEC, in which the company did not admit or deny wrongdoing, comes as the company also agreed to pay a record $5bn penalty to resolve a related case brought by the Federal Trade Commission. The SEC, which polices what public companies disclose to their shareholders, alleged that Facebook failed to adhere to requirements for what firms must communicate to investors.
“Public companies must accurately describe the material risks to their business,” Stephanie Avakian, a co-director of the SEC’s enforcement division, said in the statement. “Facebook presented the risk of misuse of user data as hypothetical when they knew user data had, in fact, been misused.”
In regulatory filings from 2016 to March 2018, Facebook misled investors by not disclosing that Cambridge Analytica had transferred data related to 30-million US users, according to the SEC. Facebook further misled shareholders by covering up the breach, telling reporters the company had not uncovered wrongdoing as late as 2017.
Facebook said in a blog post that it hoped the settlements let the company “close this chapter and turn our focus and resources toward the future”.