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Facebook Stock Drops as Feds Expand Cambridge Analytica Probe

The FBI, SEC, and Federal Trade Commission join Justice Department in investigation of massive data leak

Last Updated: July 3, 2018 @ 8:22 AM

Facebook stock took a hit on Tuesday morning on news of an expanding federal investigation into the company’s slow response to the Cambridge Analytica data leak.

Facebook shares were down about two percent to $193. 45 in early morning trading.

The social network is under increasing scrutiny from U.S. regulators, The Washington Post reported on Monday, over the massive data leak. Regulators want to know why Facebook failed to notify its users or investors when it first found out about the leak in 2015 — with the now-defunct political firm grabbing profile info on up to 87 million unwitting users.

Facebook didn’t publicly acknowledge the leak until March of this year, right as the New York Times was about to publish its initial in-depth report. The FBI, SEC, and Federal Trade Commission, according to the Post, have now joined the Department of Justice in its investigation of the matter.

Facebook COO Sheryl Sandberg, speaking in March, said the company “definitely didn’t realize the gravity” of the leak when it first learned about it.

The U.S. regulators are also investigating “discrepancies” in CEO Mark Zuckerberg’s April testimony before Congress, according to The Post.

Facebook took an initial Wall Street beating after the data leak became public, with shares dropping from about $180 a share to $150 a share in the following weeks. But the company has rebounded since then, pushing to a new all-time high last month of more than $200 a share. As Facebook has looked to repair its image, the company has tightened the access apps have to its giant user base.

“We have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you,” said Zuckerberg in March.