US Supreme Court to Hear Nvidia's Bid to Dismiss Shareholder Lawsuit
The US Supreme Court has agreed to hear Nvidia's motion to dismiss a securities fraud complaint accusing the corporation of deceiving investors about its sales to the cryptocurrency industry. The 9th United States Circuit Court of Appeals reinstated the action after it was previously dismissed by a lower court. Nvidia claims that the verdict could lead to "abusive and speculative litigation."
The complaint claims that Nvidia misled investors about the scope of its sales to the volatile cryptocurrency market. The appeal comes after a lower court revived a planned class action filed by California shareholders against the business and its CEO, Jensen Huang. The action, brought by investment management firm E. Ohman J:or Fonder AB, demands unspecified monetary damages.
Nvidia, situated in Santa Clara, California, has seen considerable expansion and is now one of the primary benefactors of the AI revolution. Its market value has risen significantly in recent years. In 2018, Nvidia's CPUs became popular for cryptomining, which involves solving complex mathematical problems to safeguard currency such as bitcoin.
The plaintiffs in the 2018 lawsuit accused Nvidia and its top officials of violating the Securities Exchange Act of 1934 by downplaying the significance of crypto-related purchases in the company's revenue growth. According to the plaintiffs, these omissions misled investors and analysts who were interested in understanding the impact of cryptomining on Nvidia's business.
The lawsuit was initially dismissed by U.S. District Judge Haywood Gilliam Jr. in 2021. However, the 9th U.S. Circuit Court of Appeals in San Francisco subsequently revived the case in a 2-1 ruling. The court found that the plaintiffs had adequately alleged that CEO Jensen Huang made false or misleading statements knowingly or recklessly, allowing the case to proceed.
Nvidia has petitioned the Supreme Court to hear its appeal, claiming that the 9th Circuit's decision could lead to "abusive and speculative litigation." In 2022, Nvidia agreed to pay $5.5 million to settle allegations made by US authorities over its inability to adequately report the impact of cryptocurrency mining on its gaming business.
The Supreme Court has also agreed to consider Meta's Facebook's identical motion to dismiss a private securities fraud complaint. The complaint alleges that Facebook misled investors in 2017 and 2018 regarding the company's and third parties' misuse of user data. The court will consider the Nvidia and Facebook cases during its next term, which begins in October.
The US Supreme Court has agreed to hear Nvidia's bid to dismiss a securities fraud lawsuit accusing the company of misleading investors about its sales to the cryptocurrency industry.
The lawsuit was revived by the 9th U.S. Circuit Court of Appeals after being initially dismissed by a lower court.
Nvidia argues that the ruling could lead to "abusive and speculative litigation."
Source: REUTERS