Facebook Faces a Public Relations Crisis. What About a Legal One?

The most pressing questions is whether the Securities and Exchange Commission — the federal agency where Ms. Haugen sent the documents — will significantly add to Facebook’s woes. Whistle-blowers have filed at least nine complaints to the agency, which has oversight of public companies like Facebook, using a selection of the internal documents to argue that Facebook misled investors with a rosier picture of the company than they knew to be true. The SEC can impose big fines for misleading investors and impose restrictions on corporate leaders. A case from securities regulators is probably far from a slam dunk, several legal experts said. The accusations in the complaints don’t appear to be quite as clear-cut as many other accounting and fraud cases taken up by the agency, they said. To win a lawsuit accusing the company of misleading investors, regulators would have to prove that executives had intended to hide or lie about problems.