The U.S. Justice Department and SEC urged the Supreme Court to allow a class action lawsuit against Nvidia, alleging the company misled investors about sales to crypto miners.
The United States Justice Department and the Securities and Exchange Commission have informed the Supreme Court that an investor class suit against Nvidia, which alleges that the tech company misrepresented its sales to crypto miners, should be approved.
The legal dispute between Nvidia and the class group has been ongoing since 2018, and it has now reached the highest court in the United States.
US Solicitor General Elizabeth Prelogar and SEC senior lawyer Theodore Weiman wrote in an amicus brief on October 2 that the class had “sufficient details” to withstand a district court’s dismissal. They also argued that the Supreme Court should authorize its revival by an appeals court.
The two agencies expressed a “strong interest” in the case since it pertains to statutes intended to restrict frivolous securities-related lawsuits.
The brief also stated that “meritorious private actions are a critical complement to criminal prosecutions and civil enforcement actions” conducted by the DOJ and SEC.
In 2018, the class group attempted to file a lawsuit against Nvidia, claiming that the company concealed the sale of over $1 billion in GPUs to crypto miners. The chipmaker’s CEO, Jensen Huang, was also alleged to have downplayed the significant number of sales Nvidia has made to the industry.
They also claimed that miners bolstered Nvidia’s sales, a claim they contend was evident when the firm’s sales plummeted in tandem with the crypto market in 2018.
The group appealed the dismissal of the case, which resulted in the Ninth Circuit appeals court reviving it in August of last year. Nvidia subsequently submitted a petition to the Supreme Court requesting that the decision be overturned.
The DOJ and SEC have refuted Nvidia’s assertion that the class suit was based on an expert opinion that fabricated information about its business and income, stating that this is not the case.
The agencies also took note of the investors’ rebuttal of Nvidia’s claims, which is purported to be supported by evidence from former Nvidia executives and a Bank of Canada report that alleges the company understated its crypto revenue by $1.35 billion.
Nvidia declined to respond to the DOJ and SEC brief.
12 former SEC officials also supported the investors in a separate amicus brief that was filed on the same day. The officials stated that “private enforcement of the federal securities laws is vital to the integrity of US capital markets.”
They criticized Nvidia’s arguments, asserting that they would establish regulations that would “preclude the use of experts at the pleading stage and require plaintiffs to possess internal company documents and databases before discovery.”
“Neither is supported by the law or good policy,” they said.
On October 2, six additional amicus briefs were submitted to support the class group. They were from the American Association for Justice, the Anti-Fraud Coalition, institutional investors, legal professors, and quantitative experts.
