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A $14 billion investment manager has sold its Facebook Inc. stock in the wake of a data leak that exposed millions of the social network’s users’ personal information.
Eaton Vance Corp.'s Calvert Research and Management considered holding onto Facebook so that it could join other institutional investors in pushing for better oversight of data privacy and security risks. But Calvert decided to divest after it was revealed that political consultant Cambridge Analytica obtained the personal data of up to 78 million Facebook users.
“It was a tipping point for us,” John Streur, Calvert’s president and CEO, said May 9 in a media briefing. Calvert’s research team already had concerns with Facebook’s “weak” data privacy controls and Mark Zuckerberg’s “concentration of power” as both CEO and chairman of the board, Streur said.
So Calvert, which held more than 500,000 Facebook shares in its funds as of late March, took Facebook out of those funds in April.
Facebook didn’t immediately return a request for comment. The Cambridge Analytica scandal has made the company turn toxic to some funds such as Calvert’s that consider environmental, social, and governance factors.
“We know that some of our peers in the industry are going to try to engage with Facebook,” Streur told Bloomberg Law.
Calvert evaluated the potential to engage with Facebook on improving its data privacy controls. “Based on the history there, based on our understanding of the team in place, we thought that the risk would probably continue,” Streur said.
The California State Teachers’ Retirement System has said it wants to engage with Facebook to learn how it’s protecting users’ data going forward. CalSTRS’s chief investment officer has also criticized Zuckerberg’s grip on the company. Zuckerberg and other company insiders control the vote at Facebook thanks to their superpowered shares.
The investment adviser to New York City’s pension funds, which holds 4.9 million Facebook shares, has called for Zuckerberg to step down as board chairman and make way for new oversight of how the company protects user data.Calvert said it will continue to monitor Facebook and other data-driven companies.
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