Recent allegations and disclosures by Facebook whistleblower Frances Haugen against the social media company have brought public attention to the tech giant’s handling of toxic and criminal content on its platform. Haugen’s claims support allegations made by several other anonymous whistleblowers over the past several years and are increasing pressure on the U.S. Securities and Exchange Commission (SEC) to investigate the company.
Since 2017, multiple whistleblowers have filed disclosures with the SEC and accused Facebook of securities violations for its complicity in enabling bad behavior on its platform. Working with organizations including the National Whistleblower Center (NWC), Alliance to Counter Crime Online (ACCO), and the whistleblower law firm Kohn, Kohn & Colapinto (KKC), whistleblowers have filed detailed SEC disclosures outlining a systemic failure at Facebook in establishing internal controls that would restrict and remove toxic and illicit content including illicit drug sales, human trafficking, and terrorist financing. According to the disclosures, this systemic failure creates financial risk because commercial advertisers do not want to see their products placed next to this illicit content and because it has mired Facebook in costly litigation and hefty fines from regulators. The whistleblower complaints were filed with the SEC because, according to the disclosures, Facebook has not been transparent about the risk associated with its failures to address illicit content and is thus misleading investors and violating U.S. securities laws.
“It is fantastic that this new whistleblower has come forward with internal Facebook evidence that confirms what we have been saying for years,” said ACCO’s Executive Director Gretchen Peters. “Documents that Frances Haugen provided are a great supplement to the whistleblower disclosures we have filed to the SEC since 2017.”
“Our research and analysis has shown that Facebook failed to establish internal controls to restrict toxic content on its family of platforms, including organized crime activity, terror finance and human trafficking, and that Facebook executives have repeatedly made material misstatements and omissions about these issues that negatively impact investors.”
“For years we have warned these problems would materially reduce Facebook’s market share, just like what is happening today,” Peters concluded.
“Facebook is guilty as charged,” added KKC founding partner Stephen M. Kohn. “Since 2017 we have filed numerous complaints with the SEC alleging securities laws violations. The new whistleblower’s information significantly strengthens our ongoing cases to hold Facebook accountable.”
“All of the prior Facebook whistleblowers have been anonymous. Frances Haugen has publicly revealed the problems and we salute her courage,” Kohn continued. “We urge Facebook to publicly state that they will not engage in any retaliation. And if there is retaliation we urge swift government action including a Department of Justice investigation into Facebook for obstruction of justice.”
Since beginning to file these disclosures, NWC, ACCO and KKC have advocated for governmental action in response to Facebook’s misconduct. For example, ahead of a 2020 U.S. Senate Commerce Committee hearing on the liability of big tech companies in bad behavior occurring on their sites, NWC sent a letter to the Committee urging them to consider the SEC whistleblower petitions.