Facebook v. Amalgamated Bank deepened a circuit split regarding the standard for pleading for loss causation. This issue primarily stems from Facebook’s handling of user data, specifically during the Cambridge Analytica scandal. The controversy originated when Aleksandr Kogan, a professor at Cambridge University, created an app called “This is Your Digital Life” on Facebook that harvested user data.  British political consulting firm Cambridge Analytica acquired the data and used it improperly, which potentially impacted the 2016 U.S. presidential campaigns. 

The Private Securities Litigation Reform Act (PSLRA) imposes heightened pleading requirements for plaintiffs filing federal securities fraud class action lawsuits. Specifically, plaintiffs raising a claim of securities fraud must “state with particularity all facts on which” they base their belief that a false statement was made by a defendant corporation and “state with particularity facts giving rise to a strong inference” that the defendant in making those false statements acted with scienter, or intent. 15 U.S.C. § 78u-4(b)(1)(B) and (2)(A).