The California State Teachers' Retirement System has joined a derivatives case against Facebook in regards to Cambridge Analytica.
The litigation at hand is a pending derivative lawsuit against Facebook's leadership, including the social media company's chief executive, Mark Zuckerberg.
CalSTRS said intervening in the existing derivative suit will give it the opportunity to pursue corporate governance reform.
Its aim is to "protect Facebook's profitability, strengthen the resiliency of its business model and enhance the long-term value of Facebook as a corporation", believing that weak corporate governance practices contributed to the misuse of private data and damage to Facebook's bottom line.
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This is evident in the aftermath of Cambridge Analytica scandal, where Facebook users' private data was compromised: Facebook saw a $119 billion dollar drop in its stock price - the largest single-day loss in market history.
"CalSTRS has engaged with Facebook on numerous occasions to press for core governance standards such as board diversity, board independence, and proportionate voting rights that are central to ensure accountability at public companies," CalSTRS portfolio manager of sustainable investment and stewardship strategies Aeisha Mastagni said.
"This lawsuit represents an opportunity to gain greater protections for the public and investors that will build upon recent penalties imposed by the Federal Trade Commission."
The suit originally was brought by the $478 million Fireman's Retirement System of St. Louis and retail investor Karen Sbriglio.
On 24 July 2019, the FTC announced that Facebook agreed to pay a $5 billion penalty and establish a board-level privacy committee as well as a board nominating committee, but no individuals were held personally accountable.
By joining the litigation, CalSTRS seeks additional reforms of Facebook's board and share structure. CalSTRS' Corporate Governance policy includes litigation as a strategy to protect shareholders and corporate earnings.
"The settlement in FTC v. Facebook Inc. represents a first step, but more is needed," said SISS director Kirsty Jenkinson.
"We are sending a message to all large corporations that good governance is good for business, and we expect that of any corporation within which we invest."
A derivative lawsuit is brought by shareholders against a third party on behalf of a corporation to remedy harm done to the corporation. Often, the third party is an insider of the corporation, such as a director.