[jbombadil]

> This seems totally insane to me. The lawsuit is arguing that directors not only have a fiduciary responsibility to shareholders to increase the value of their Meta holdings, but also of other stocks they may own.

This is my thinking as well. If I own stock of Coca Cola and Pepsi. Coca Cola comes up with a great product that eats a huge amount of market from Pepsi. According to this I sue Coca Cola for my losses on the Pepsi stock?

[Kranar]

I don't think this lawsuit has much merit, but the lawsuit is arguing against damages to an overall portfolio. If a diversified portfolio consisting of Coca Cola and Pepsi was on the whole damaged due to the actions of Coca Cola against Pepsi, then the plaintiffs argue that Coca Cola would be liable for some part of that damage.

If, however, Coca Cola's actions harmed Pepsi specifically but benefited the overall portfolio, then no damages would be pursued.

So Coca Cola is welcome to take market share from Pepsi so long as doing so is a net benefit to a diversified portfolio, as opposed to doing so in a way that harms a diversified portfolio.

[donmcronald]

That’s insane! Imagine if a small company invented a cure for cancer. Would they be liable for the losses of all the pharmaceutical companies?

It would be the end of innovation.

[chowells]

No, because they would present massive gains to every industry that loses employees to cancer. That's all of them, by the way. There would be no net loss, and innovation would continue to be rewarded.

What would no longer be rewarded is parasitism.

[ClumsyPilot]

If companies were that concerned about loosing employees, companies like deliveroo and amazon would not be destroying their health. Coal minin conoanies would not need health and safety regulation - they used to literally kill their workers

[Kranar]

I know I should interpret every comment in good faith, but it really is hard to understand how you can read my comment and make such a reply. It feels like you didn't actually take the time to understand what I said or even read the article before commenting.

At any rate, if a company found a cure for cancer the stock market would absolutely skyrocket in a way almost never before seen. It's unbelievably hard to imagine how a company finding a cure for cancer would be to the detriment to a diversified portfolio.

[arjvik]

What's to say the stock market would skyrocket? Especially if this cure is accessible to everyone and published freely online, the only direct effect is pharma companies stocks crashing because of a loss of oncology drug revenue. Who's to say what the rest of the stock market would to to react?

Even if it's a tossup, does that mean there's a 50% chance of the inventor of such a cure being liable for that crash?

[pacerier]

It doesn't work like this. If it's a tossup (ie probability =~1:1) then there's no legal liability. Importantly, whether the cat's dead or alive is irrelevant.

The issue here is that it's not a tossup. The probability is >=2:1 hence the liability, even if that is alive after the plunge.

[jbombadil]

Legit question: is it "detriment to a generic diversified portfolio" or "detriment to a specific diversified portfolio"? (As in if my portfolio is diversified and it got decreased in value I have grounds to sue)

[Kranar]

The complaint in the article says that Meta is required to consider the impact of its actions on the diversified portfolios held by its shareholders. The plaintiff asserts that it's not about having a detrimental impact on a generic diversified portfolio but rather the various diversified portfolios held by its shareholders.

The specific complaint is that Meta ignored the concerns raised by its shareholders about the impact of its actions on the broader portfolios held by its shareholders.

Once again I do not think this case has merit, and lawsuits of this nature almost always fail, but we should at least take some time to understand what is actually being pled so that we can object to it with a firm standing.

[JohnJamesRambo]

>The complaint alleges that the Meta directors failed to consider that shareholders with diversified portfolios may be subject to net losses from Meta’s pursuit of a business model that maximizes advertising revenue without regard to the harms it inflicts on the rest of their portfolios.

This is one of the craziest stances/lawsuits I’ve ever read. Boglehead thought has taken over so much that the shareholders are referring to a nebulous diversified portfolio as something that somehow must be protected by law. That’s too far out there.

[evrydayhustling]

What is a diversified portfolio? Most indices are weighted by market cap, since everything else requires trading. So do we all the owe the most protection to the largest companies?

The idea is deeply deeply broken, essentially, "everyone should care about everything according to some notion of a portfolio i think is normal".

[nanidin]

The idea is counter to competition.

[syrrim]

It's an interesting perspective. There's probably a sense in which overall improving a diversified portfolio maps to improving society or the economy as a whole, rather than harming society to make a dollar. So whereas the lawsuit likely has no grounds, it might actually be a good thing if this was the way things worked.

[dpatterbee]

I think equating (or even correlating) the market value of some stocks with "improving society" is a pretty big reach.

[syrrim]

At the very least, it maps a lot more closely than does the market value of a single stock.

[zeckalpha]

If the decrease in value to Pepsi is less than the gains in Coca Cola, then yes, by the logic of this suit. However, I'd Coca Cola gains more than the loss to Pepsi, then no need to sue.