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Accused of Failing to Disclose Security Breach, Google Sued by Rhode Island

As of Tuesday afternoon, a day after Google announced the number of users whose personal information was exposed, the Rhode Island pension fund owned 37,000 shares in Google, now traded as Alphabet shares, worth about $40 million, said Evan England, a spokesman for Magaziner.

By Donita Naylor

Rhode Island is suing the parent company of Google for hiding a security breach that affected 52.5 million users, state General Treasurer Seth Magaziner stated in a news release Tuesday.

"Google had an obligation to tell its users and investors that private information wasn't being protected," Magaziner stated in the release. "Instead, Google executives decided to hide the breaches from its users and continued to mislead investors and federal regulators. This is an unconscionable violation of public trust by Google."

Whistleblowers alerted the public, and in October the company announced it was shutting down Google+, a social media platform.

A motion to combine Rhode Island's suit and two others into a class-action suit and to name the Rhode Island pension fund as lead plaintiff was filed Monday by a San Diego class-action law firm engaged by Magaziner's office. Robbins Geller Rudman & Dowd filed the motion in U.S. District Court for the Northern District of California. Google and Alphabet, its parent company, are based in Mountain View, a Northern California city at the heart of the Silicon Valley, at the southern end of San Francisco Bay.

As of Tuesday afternoon, a day after Google announced the number of users whose personal information was exposed, the Rhode Island pension fund owned 37,000 shares in Google, now traded as Alphabet shares, worth about $40 million, said Evan England, a spokesman for Magaziner.

The state treasurer monitors companies in its investment portfolio, England said. If a company's practices are less than satisfactory, the treasurer's office might petition at a shareholders' meeting for better governance.

Calling the breach a "systemic vulnerability," England said that in the Google case, "we felt it was appropriate to seek restitution." Among other assertions, the motion states that "damage to the Company's reputation and operating results and loss of customers from this failure of the Company's security measures were imminent and inevitable."

A hearing on combining the cases and naming the Rhode Island retirement system as lead plaintiff is set for Feb. 8 in federal court in San Fransisco.

(c)2018 The Providence Journal (Providence, R.I.)

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