US Supreme Court to review Nvidia shareholder lawsuit

The Supreme Court agreed to hear Nvidia’s request to dismiss its securities fraud lawsuit.

The class action lawsuit, currently under Supreme Court review, alleges that Nvidia and its CEO Jensen Huang misled investors by misrepresenting the portion of its sales devoted to crypto industry-related activities.

The lawsuit filed by shareholders in California seeks unspecified monetary damages.

“The company made false and misleading statements to the market. NVIDIA claimed that it monitors cryptocurrency markets in real time and quickly makes necessary adjustments to its business.” “NVIDIA also stated that the decline in demand for its GPUs among miners will not have a negative impact on its business, as there is also strong demand for GPUs from the gaming industry.” He claimed.”

The Supreme Court’s decision to review this case could make it harder for shareholders to file securities and financial fraud lawsuits against the companies in which they invest.

Nvidia litigation history

In a lawsuit filed in 2018, plaintiffs accused Nvidia and top company officials of violating the U.S. Securities Exchange Act of 1934 by making false statements that Nvidia’s revenue growth in 2017 and 2018 was due to crypto-related purchases. Nvidia’s chips gained popularity for their use in crypto mining.

The plaintiffs alleged that these omissions misled investors and analysts trying to understand the impact of crypto mining on Nvidia’s business.

The case was dismissed in 2021, but the San Francisco-based Ninth U.S. Circuit Court of Appeals revived the case in a 2-1 decision. The Ninth Circuit found plaintiffs’ allegations that Huang knowingly or recklessly made false or misleading statements were sufficient and allowed the case to proceed.

The judges will hear Nvidia’s argument that the complaint lacks enough specificity to proceed.

Nvidia urged the justices to grant its appeal, arguing that the Ninth Circuit’s decision would open the door to “bad faith and speculative litigation.”

Nvidia agreed to settle the charges with US authorities in 2022 by paying $5.5 million. The accusations alleged that the company did not adequately disclose the effects of crypto mining on its gaming business.

Nvidia’s (NVDA) stock price reached an all-time high early Monday, once again surpassing Apple’s total market capitalization and moving into second place in the global market.