But that's not what they say to shareholders. These deals always come along with "admitting no fault", so they don't have to say to anyone that they're conducting illegal activities. They're perfectly free to cite the fine up to overzealous prosecution or whatever. I think that usually the case that's made is "we didn't do anything wrong, but it was cheaper to settle than to fight".
Under GAAP, the company is legally mandated by law to disclose it in the FS. Since the FS is the primary was the company communicates performance to investors, they in fact are saying this to investors.
Its called a legal provision or legal reserve. they need to set aside money for the eventual expense of the setlement. This is going to eat right into EPS.
And, any material change in provision will be discussed. Plus, any investor worth their salt is going to be poring over FS disclosures, including any legal provisions.
Admission of fault has nothing to do with FS. Its purely an insurance topic
Venture capitalists aren't stupid. Even if Zuck says everything is okay they come to their own conclusions.
Obviously everything is NOT okay, otherwise the company wouldn't be getting fined in court for breaking the law.
VCs know just as well as we do that Facebook's business model (privacy-invading targeted advertising) exists because law has not caught up to technology yet. That's starting to change, as this settlement shows.
If Meta suffer many more of these legal settlements which wipe >1% off the annual profit then investors will start to divest. The value of the company will fall.
Keep in mind this was a settlement amount which suggests the legal liability was actually a lot higher than $1.5B
So I think my statement is supported: fining corporations works.
