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The ability to market products and services direct to consumers has rarely been more accessible than with smartphones. However, as privacy concerns increase, the age of unrestrained digital marketing may be over, as evidenced by a recent shareholder lawsuit against Meta Platforms after changes to the Apple iOS ecosystem led to a significant profit downgrade.

Meta is the holding company of Facebook, the social network whose business model relies on leveraging the personal data of its users to deliver targeted advertising. However, as this model comes under pressure, the company has forecast a $10 billion reduction in revenue shortly after reassuring investors that the impact of Apple’s iOS privacy tweaks were manageable.

The claim, brought by the Plumbers and Steamfitters Local 60 Pension Trust in a San Francisco federal court, alleges that Meta executives failed to inform shareholders that their efforts in mitigating Apple’s iOS privacy changes were failing, and that management painted a false and misleading picture of their ability to rebuild the company’s advertising business.

Meta and many other technology companies are revisiting their core assumptions following Apple’s decision that app developers be required to seek permission from users before they are tracked. These changes have seen users opt out of cookies and other cross-app tracking methods, thereby reducing the effectiveness digital marketing, as well as its profitability.

In 2021, Facebook rebranded as Meta Platforms to reflect the company’s shifting focus towards building the metaverse as a digital extension of the physical world. While this vision of the future is ambitious, it does seem clear that some shareholders are equally concerned about the present; and how a changing privacy landscape may undermine the value of their investment.

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When Virgin Galactic listed on the on the New York Stock Exchange in 2019, its management did not likely envisage the extent of the challenges they lay before them. However, some of these apparent difficulties have come to fruition, with the company recently suing its own directors and officers in a shareholder derivative lawsuit for alleged breaches of fiduciary duty.

According to the claim instigated by shareholders, Virgin Galactic‘s chairman, Chamatha Palihapitiya, allegedly took advantage of his role to sell 10 million shares for $315 million before abruptly quitting the board. It is also alleged that the company’s founder, Richard Branson, pocketed $301 million by capitalising on a period of good news in which to sell.

The space travel company has been struggling as of late, largely as a result of an investigation into potential defects of its spacecraft; delaying commercial flights until late 2022. According to the complaint filed in a federal court, Virgin Galactic management were aware of these potential defects for up to three years prior to their public disclosure.

Unfortunately, it is not the first time that Virgin Galactic executives have been accused of misleading investors. While the company has promoted successful flights of its Eve and Unity spacecraft, the claimants argue that these vehicles are better described as “rudimentary prototypes”, citing a lack of key engineering documentation and material design errors.

Originally founded by Richard Branson 2004, Virgin Galactic received regulatory approval to fly customers into space in 2021. Today, the company claims it is on track to commence commercial flights by the end of 2022, with a reported waiting list of 750 customers who have placed deposits for tickets priced at $450,000 for a 90 minute return journey.

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Building a world changing company that dominates an entire market is no easy task. But imagine doing such a good job of it that your shareholders are concerned with the consequences. This is the challange faced by Alphabet, the holding company of Google, as it faces an antitrust related claim brought by its shareholders in the form of a derivative class action lawsuit.

The complaint alleges that Alphabet is likely to accrue significant antitrust liabilities, and is at risk of being broken up by regulators. The founding directors of the company, Sergey Brin, Larry Page and Eric Schmitt, are accused of exerting undue influence on corporate governance, resulting in breaches of fiduciary duty, unjust enrichment, and corporate waste.

The lawsuit has arisen in the wake of Alphabet coming under increasing regulatory scrutiny, culminating in numerous claims initiated by government and private interests. Each lawsuit shares a common theme; ensuring that the company’s management have in place adequate checks and balances to maintain transparent and responsible business practices.

Alphabet was established in 2015 as a holding company of Google and a number of related enterprises, such as the Android mobile operating system and Google Play store. The purpose behind its creation was to clean up the group’s existing governance structures, and ensure that its various units remain sufficiently accountable to stakeholders as a whole.

As our society becomes further digitised, the centralisation of information is a concern shared by many. The recent lawsuits faced by Alphabet indicate that it is not just regulators that have an active interest in ensuring that appropriate controls are in place, but also shareholders who will experience equally the risks and rewards of innovation.

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When Beny Steinmetz was detained in Greece on an international arrest warrant, it came as somewhat of a surprise. The Israeli billionaire, who arrived by private jet into Athens, had previously been convicted of bribery in Romania and Switzerland. However, according to his lawyer, the detention was unexpected, and an error of the European Police authority, Interpol.

Steinmetz made his money in the diamond trade, before securing the rights to the Simandou mine in Geneva, the world’s richest untapped iron-ore deposit in Guinea. This investment should have been his crowning glory but instead it sparked years of legal headaches that culminated in a European court conviction for bribing Guinean officials.

The verdict was a major blow to Steinmetz, who is now fighting multiple legal battles around the world relating to the West African mine, which was first acquired in 2008. The asset was stripped from him in 2012, amid allegations of paying bribes of $8.5 million to Mamadie Toure, the wife of Guinea’s former president Lansana Conte, now deceased.

The way in which he was convicted provides some insight into the risk of conducting business abroad. Judge Banna suggested that making a profit of billions from an initial investment of $160 million was in itself sufficient evidence of corruption, adding in her closing remarks; “the fact that Steinmetz wasn’t aware of all details doesn’t change a thing.”

At the time of his conviction, Steinmetz’s lawyer said the five year jail sentence would be appealed because Steinmetz never took part in bribery and the court didn’t properly consider the fragility of the testimony against him. However, for the moment Steinmetz must remain in Greece, as it may take 90 days for a court hearing to address the Interpol discrepancy.

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Families have created of many of the world’s most successful businesses. No matter how successful, however, a family involved in business is not immune from breakdown. Unfortunately, this possibility has become reality for the well-known Hinduja family, who find themselves at the centre of a series of lawsuits, as recently reported by Bloomberg.

Founded by Parmanand Hinduja in 1914, in the Sindh region of British India, the one-time commodities-trading firm was rapidly diversified by his four sons, with early success coming from distributing Bollywood films outside India. Now in London, the family is neighbours with Queen Elizabeth; their Carlton House Terrace a short stroll away from Buckingham Palace.

With a collective net worth of about $15 billion, the Hinduja brothers have always presented a united front, with little to suggest a divergence in philosophy. With dozens of companies, including six publicly traded entities in India, the closely held Hinduja Group employs more than 150,000 people in 38 countries, across truck-making, banking, chemicals, power, media and healthcare.

What was once a steadfast business empire, however, is now on the precipice of evolution. Karam Hinduja, the 31 year old grandson of the eldest brother, Srichand Hinduja, is now asking for the once unthinkable; that the group’s assets be broken up. The young and ambitious entrepreneur wishes to establish his own vision of the future, independent of the past.

As lawsuits piles up in the courts of London and Switzerland over control of the group, Srichand and his brothers Gopichand, Prakash, and Ashok cling to the family motto; “everything belongs to everyone and nothing belongs to anyone.” But the conglomerate of 107 years may be about to encounter one of life’s ancient lessons; the only constant is change.

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Being a successful entrepreneur often means imagining what the future could be like and convincing others of your vision. It takes big ideas and bold action to change status quo. However, there is a fine line between enthusiasm and fraud, a topic being explored in the trial of Elizabeth Holmes, the charismatic founder and CEO of failed medical device company, Theranos.

According to charges laid by the US Government, it is alleged that Holmes, along with her former partner and company CFO, Ramash Balwani, engaged in a multi-million dollar scheme to defraud the company’s investors, as well as doctors and patients. Prosecutors claim that the two promised to revolutionize health care, but profited from misleading and deceptive conduct.

The claim, being tried in the US District Court, addresses two primary areas of concern. The first is that Holmes and Balwani used advertisements and solicitations to encourage and induce doctors and patients to use Theranos blood testing technology, even though they knew that the devices were not capable of consistently producing accurate and reliable results.

The second is that Holmes and Balwani made numerous misreprestations to potential investors about the financial condition of the company and its future prospects. For example, it is alleged that patient tests were represented as having being completed with proprietary technology, when in fact, these tests were conducted from other commercially-available sources.

It is well known that Holmes tried to established a reputation as a hard-charging entrepreneur, and in many ways she succeed. Theranos peaked at a valuation of $9 billion in 2014 before media and regulatory scrutiny drove it to ruin less that four years later. Balwani, who will be tried separately next year, has pleaded not guilty to the charges, and also denies manipulating Holmes.

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In business, it isn’t always easy to strike a balance between developing a product that is safe and effective, while also maintaining financial viability. Aeronautical engineering is no expectation, and this has been emphasised by a recent agreement of Boeing’s directors to settle a claim against them for $237 million, arising from allegations of mismanagement.

The derivative class action lawsuit led by some of Boeing’s largest shareholders, such as New York’s pension fund for government employees, alledges that the company’s directors breached their fiduciary duties by dismantling Boeing’s much lauded safety-engineering corporate culture in favour of one that prioritised financial-engineering and short term incentives.

The claim arose in the wake of two incidents involving Boeing’s newest plane, the 737 MAX, after 346 people were killed within a five month period in 2019. The incidents, occurring in Ethiopia and Indonesia, were attributed to a flight control system that relied on a single sensor that failed, leading to the deaths and worldwide groundings of the planes by regulators.

According to a draft release, which is yet to be approved by the courts, much of the $237 million settlement is expected to be made by Boeing’s insurers. In addition, the company is likely to adopt a number of changes to address the cultural concerns raised, including the appointment of an internal ombudsman, as well as adding engineering and safety experts to its board.

The FAA eventually cleared the 737 MAX to return to service in late 2020, after Boeing took significant actions to reinforce its commitment to safety. Tom DiNapoli, whose office led the lawsuit, said “this settlement will send an important message that directors cannot shortchange public safety and other mission critical risks”. The matter is likely to be settled without an admission of wrongdoing.

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Running a public company is a tough job. There are a million and one things that can go wrong, and often the only thing standing in the way of a potential problem is quality risk controls. PayPal has recently found this out the hard way, after the company was sued by its shareholders over an alleged lack of controls amid an investigation into its affairs by regulatory authorities.

In a class action lawsuit filed in the United States, PayPal is accused of hiding its compliance oversight in annual reports over a number of years. Its shareholders claim that they have suffered losses after the company’s share price declined 6% following disclosures that it had been cooperating with a regulatory probe into its credit and debit card programs.

More specifically, PayPal advised that the Securities and Exchange Commission (SEC) had been looking into whether marketing revenues had been correctly disclosed, and the issuance of branded payment cards complied with regulations governing interchange fees. Interchange fees, which can be more than 2% of each transaction, have drawn much scrutiny as of late.

PayPal’s issues became even more acute after it released an outlook for the remainder of the financial year which was materially lower than expected. The driver of this gap in expectations was predominately the company’s changing relationship with online marketplace, eBay, who has decided to move away from using PayPal as its primary payments processor.

The reporting obligations imposed on public companies are onerous. Nevertheless, the takeaway from PayPal’s experience is clear; shareholders care about the value of their investments, and will go to lengths to protect the integrity of a company’s affairs. Management should aim to communicate failure just as clearly as success, or else expect to be held accountable.

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The video game industry attracts a lot of media attention, and is a significant influence on popular culture. Riot Games, the publisher of successful eSports video game, League of Legends, is the latest company to make headlines, albeit in circumstances that are far from flattering. Nevertheless, it will allow us to reflect on some of the challenges in the modern workplace.

Riot Games CEO, Nicolo Lauren, has found himself at the centre of a sexual harassment claim, filed by an ex-employee and former personal assistant. The details of the allegations are serious, and highlight how the interactions between management and employees can quickly deteriorate if professional boundries are not appropriately set and respected.

Corporate culture can be difficult to measure, but certainly counts for a lot in employment-related matters. This is especially true in high-performing companies such as Riot, where a single video game release can earn upwards of $1.6 billion. Left unmitigated, however, success can lead to the tolerance of behaviour that would otherwise be deemed unacceptable.

Accordingly, few may be surprised to learn that Riot has a checkered history in terms of culture; again placing the interactions of men and women at the forefront. The company has taken steps to address these issues, including a $10 million class action settlement with 1,000 of its female employees. Given the latest incident, however, there appears further work to do.

Companies should aim to cultivate amicable relationships between employees. In doing so, an organisation’s management, and CEO in particular, must lead by example. Since the allegations have been raised against Lauren, an internal review has been completed; a special committee found no evidence of wrongful behaviour, however, the legal matter remains ongoing.

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There is little doubt that electric vehicles are the hot topic of the day. Everyone from Tesla to Volkswagen to Toyota to BMW wants to get in on the future of transport. Another company trying to stake its claim is Nikola Motors, founded in 2015 with the ambitious goal of manufacturing commercial trucks that run on alternative fuel with low or zero carbon admissions.

Trevor Milton, Nikola’s founder and largest shareholder, has found himself at the centre of attention recently, but probably not in a way that he intended. He is subject to a claim brought against him by the United States Securities Commission (SEC) for fraud. The charge; allegedly deceiving retail investors about the technical advancement of his company’s products through social media.

Anyone who has been keeping tabs on popular social media platforms like Twitter will not be surprised to hear about such shenanigans. Elon Musk, for example, is well known for being able to move the price of Tesla stock, amongst other things, at the click of a button. It appears that Milton may also have been a bit too enthusiastic for the likes of the SEC, while marketing Nikola’s brand.

There’s nothing wrong with self-promotion provided it is done within the rules. According to the SEC, Milton was obligated under securities law to communicate “completely, accurately, and truthfully.” Whether this occurred is yet to be determined. What is not in doubt, however, is that at that Milton raised $1 billion from investors with the use of a special purpose acquisition company (SPAC).

Nikola Tesla (1856–1943), was a Serbian-American inventor and engineer, best known for his innovation in electric power. While the world of electric vehicles is certainly exciting and holds much potential for the future, some of the ventures marketed by individuals such as Milton may not be quite what the company’s namesake would want to be associated with – at least not yet.

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