Facebook CEO Faces Accusations Of Securities Fraud

It's been a rough couple of weeks for Facebook CEO and co-founder Mark Zuckerberg.

Facebook's new privacy policies have sparked a user backlash, with over ten thousand users organizing a coordinated exodus from the site on Quit Facebook Day.

But that's not the only thing troubling the 26-year-old social media tycoon. Zuckerberg is now facing allegations of securities fraud regarding the out-of-court settlement Facebook made with a rival company whose owners claim Zuckerberg stole their source code.

These allegations have followed Zuckerberg since his Harvard days, when he was hired by a student-run dating website called Harvard Connection (now called ConnectU), which at the time was similar to Zuckerberg's startup TheFacebook. Tyler and Cameron Winklevoss, the creators of ConnectU, brought suit against Facebook in 2003. They settled for a reported $65 million in 2008 and turned ConnectU over to Facebook.

(The case's shady details have become something of a legend, spawning a book (Accidental Billionaires) and an upcoming film called The Social Network.)

The Winklevoss twins are now trying to appeal their settlement on the grounds that they were shortchanged by Facebook. VentureBeat has the details:

The ConnectU cofounders are arguing that Facebook executives and lawyers presented the cash-and-stock offer's value as $65 million, relying on a valuation of $15 billion that Microsoft paid in 2007 when buying preferred shares in the company. The settlement, however, was to be paid in common shares, not preferred shares, which Facebook itself valued at roughly 75 percent less for the purposes of calculating taxes on stock-based compensation -- cutting the settlement's offer roughly in half.

Read more about the securities fraud allegations at VentureBeat.

More on Facebook and privacy:

• Facebook Alternatives: 9 Other Secure Social Networks You Could Switch To

• Facebook CEO 'Doesn't Believe In Privacy'

• Facebook Privacy Policy Explained: It's Longer Than The Constitution

• Facebook Calls All Hands Meeting On Privacy

• Visual Guide To Facebook's Privacy Changes Over Time

• The Ultimate Guide To 11 BIG Facebook Changes--And What They Mean

• Facebook Usernames, Email, Photos exposed on Yelp!

• 'How Do I Delete My Facebook Account?' Query Soars In Popularity

• WATCH: How To Fix Your Facebook Privacy Settings In 2 Minutes

• Facebook CEO Allegedly Mocked Users For Sharing Personal Data With Him

• FLIP FLOP? Facebook CEO Praised Privacy Controls In 2008

Comments

[vulpecula762mm]

11:01 AM on 05/25/2010

When in doubt.... blame a Jew. Solid advice... centuries old.

[joocee102]

03:10 AM on 05/24/2010

So Mr. Zuckerberg stole an idea, and source code in creating one of todays top social network. In my eyes he's the true winner and I know that a lot of you that doesn't sit right because it doesn't seem right, but if that's the case then why haven't we given America back to the Indians?

[mrjames1]

05:08 AM on 05/23/2010

After being su/ed for stea/ing the f*cebook idea (with tons of evidence he did) he settled a civil lawsuit. Trouble is when he settled it, looks likely he commited fra/ud in stating the valuation of the company, which in this case the scre/wing of someone becomes a criminal matter

couldn't happen to a more deserving fella

heres a link that makes a good case, backed by emails, that even the name f*acebook was stolen from someone elses idea (this is separate from the code stealing lawsuit and all the other ones)

http://www.news.com.au/technology/facebook-name-stolen-says-ex-friend/story-e6frfro0-1111116076684

[rougebaisers]

12:04 AM on 05/23/2010

Facebook is finito?

[joocee102]

03:04 AM on 05/24/2010

Yea, keep telling yourself that.

[richardgordon]

08:59 PM on 05/22/2010

I cannot understand the appeal of Facebook.

[YouMustBeJokin]

02:01 PM on 05/22/2010

Let's face it people love putting all their "stuff" out there even when they claim of being Stalked, yet they'll put up pictures, personal info, etc. No one really cares (if they did, there's a invention called a TELEPHONE) It's just an illusion so others can think people really care about them....lol

[9jabook]

07:35 AM on 05/22/2010

he had it coming a long time ago 9jabook

[ruffdeezy]

08:55 PM on 05/21/2010

This guy looks like Rand Paul

[CMarks]

08:08 PM on 05/21/2010

Just more evidence that all the money in the world can't buy you common sense. FarceBook is just another flavor of the day and, like a bad meal, it too will pass.

[euonymous]

06:28 PM on 05/21/2010

Very recently a Chinese businessman was sentenced to 14 years imprisonment for bribery, insider trading, and illegal business practices. Seems to me if the US dealt out serious penalties instead of a slap on the wrist, we might see less securities fraud in this country. Just saying....

[Solja]

05:16 PM on 05/22/2010

The fraudsters are making the laws.

[sprider]

06:24 PM on 05/21/2010

A CEO accused of fraud? Shocker

[rubinoff]

06:04 PM on 05/21/2010

ut-oh, i made a comment about HuffPo and it was deleted....it was no lie and i don't understand.???

[rubinoff]

06:02 PM on 05/21/2010

no way will i get a facebook account, even though, i've been invited....no thank you.

i still can not figure out why HuffPo...archieves our comments, date/time.
we're just having fun here...not all that serious. :(

[McBuckwyld]

05:45 PM on 05/21/2010

Now there's a suprise

[MadHeart]

05:14 PM on 05/21/2010

Social network? How about just meeting people in person where you are? Or aren't they "good enough" for you? Suckers are born every minute.

[Solja]

05:18 PM on 05/22/2010

Said by a person online to thousands of folks NOT living "where they are".

Nice to meet you, genius.