Nvidia’s motion to dismiss a lawsuit alleging securities fraud has been granted by the Supreme Court.
According to the class action case, which is currently being examined by the Supreme Court, Nvidia and its CEO, Jensen Huang, misrepresented the percentage of their sales that went toward operations related to the cryptocurrency business, deceiving investors. Amounts unknown in monetary damages are sought in the California lawsuit filed by stockholders.
“The Company made false and misleading statements to the market. NVIDIA claimed it monitors the cryptocurrency markets in real-time and rapidly makes the necessary adjustments to its business,” the lawsuit read. “NVIDIA also claimed that a drop in demand for its GPUs amongst miners would not hurt its business because there is also strong demand for GPUs from the gaming industry.”
It might be more challenging for shareholders to sue corporations they own for financial fraud and securities violations as a result of the Supreme Court’s decision to consider this issue.
Nvidia Lawsuit Background
In a civil action brought in 2018, plaintiffs claimed that Nvidia and senior corporate officers had broken the U.S. Securities Exchange Act of 1934 by making misleading claims in 2017 and 2018 about how much of Nvidia’s revenue growth came from purchases linked to cryptocurrencies.
A growing number of people are using Nvidia CPUs for cryptocurrency mining. According to the plaintiffs, these omissions deceived analysts and investors who were trying to figure out how cryptocurrency mining would affect Nvidia’s bottom line.
The action was dismissed in 2021, but in a 2-1 decision the Ninth U.S. Circuit Court of Appeals located in San Francisco brought it back. The Ninth Circuit accepted the plaintiffs’ accusations that Huang had made false or misleading representations with knowledge or recklessness and granted the plaintiffs’ request to proceed with their case.
The justices will discuss Nvidia’s argument that the complaint needs to be more specific to move forward. Nvidia contended that the Ninth Circuit’s decision would allow for “abusive and speculative litigation,” and it urged the justices to consider its appeal.
Nvidia consented to pay $5.5 million 2022 to resolve legal issues with U.S. authorities. According to the accusations, the company did not fully explain how cryptocurrency mining affected its gaming operations.
Earlier on Monday, the price of Nvidia’s (NVDA) shares hit a new all-time high, rising over Apple’s entire market value once more and placing second in the world market.
