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.

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