AP7 wins legal battle against Facebook

AP7, part of the Swedish state pension fund system, has claimed victory after Facebook founder Mark Zuckerberg walked away from a plan that would have allowed him to maintain his voting rights despite selling off much of his stock in Facebook for charitable purposes.

AP7 chief executive officer, Richard Gröttheim, said: “We are very happy with this result, which was a full victory for Facebook’s public stockholders. AP7 agreed to lead this litigation because we believed that the reclassification would create a terrible corporate governance scheme. If Mark Zuckerberg wants to sell his stock and become a philanthropist, he should do that. But he shouldn’t be allowed to keep controlling Facebook while devaluing current stockholders after he does so.”

AP7 was co-lead plaintiff in a class action against Facebook’s plan to reclassify shares and was represented by law firm Kessler Topaz Meltzer Check. Gröttheim said that minority shareholders faced an estimated fall in the value of their Facebook shares of $10 billion. He added that AP7 had shown in the past it was prepared to take legal action as part of the possible range of corporate governance options open to it. “We try to use different tools which are complementary to each other. We have a black list of companies that we don’t invest in, we vote at annual meetings and we engage in dialogue when we don’t think companies are behaving in the right way. Taking part in a class action shows companies that we are willing to go to court and sue them, if we have to. I would recommend it to other asset owners, when used in combination with other measures and in a thoughtful way.”

AP7 is Swedish pension system’s default option fund, and manages the savings of 3.5 million Swedes.