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Facebook’s Settlement Over ‘Sponsored Stories’ Blocked by Judge

Facebook Inc., whose shares fell to a record low yesterday, failed to persuade a judge to approve a $20 million settlement resolving a lawsuit over “sponsored stories” that provides cash for advocacy groups and attorneys and no money for users.

U.S. District Judge Richard Seeborg in San Francisco yesterday refused to grant preliminary approval of the accord, saying that while it isn’t feasible to divide $10 million among as many as 70 million affected customers, it isn’t sufficient to justify giving that money only to advocacy groups. Lawyers for customers had argued the groups would be “watchdogs” over Facebook.