Shareholders Challenge Movano Merger Amid Export Scandal and Legal Probes

Movano Inc. (NASDAQ: MOVE), a publicly traded medical wearables company, is facing mounting legal and shareholder challenges following its proposed merger with Corvex, an AI cloud firm, as federal authorities allege a separate scheme to export restricted Nvidia chips to China. The deal, which would see Movano shareholders own 3.8% of the combined entity, has drawn investigations into whether the board breached fiduciary duties by failing to secure fair value for investors, according to law firms Halper Sadeh LLC and Brodsky & Smith and Brodsky & Smith.

The merger has been entangled with broader legal troubles involving Corvex's chief technology officer, Raymond, who is among four individuals charged in a federal indictment for allegedly conspiring to smuggle hundreds of Nvidia GPUs to China through Thailand. The indictment details efforts to export 50 H200 GPUs and 10 HP supercomputers containing H100 chips, with Raymond's Alabama-based company, Bitworks, implicated as a supplier according to reports. A Corvex spokesperson distanced the company from the activities, stating Raymond was a former consultant whose employment offer had been rescinded according to CNBC.

The legal fallout has reverberated in the market. Movano's stock dropped 4.12% in pre-market trading on Nov. 17, according to Benzinga, as shareholder lawsuits gained momentum. Both Halper Sadeh LLC and Brodsky & Smith are urging investors to evaluate the merger's fairness, with the latter noting that Corvex shareholders would control 96.2% of the combined company post-transaction according to the firms and the other. Critics argue the structure disproportionately favors Corvex stakeholders, raising questions about the due diligence conducted by Movano's board.

The Nvidia export case adds another layer of complexity. The indictment alleges that Raymond and co-conspirators used a shell company, Janford Realtor LLC, to facilitate the smuggling, with funds flowing through Chinese-linked accounts to Raymond's Alabama business according to reports. The scheme generated over $3.4 million in illicit wire transfers, leading to seven money laundering charges against Raymond according to CNBC. While Corvex maintains no involvement, the association has cast a shadow over its credibility, with Movano shareholders now left to navigate both corporate and regulatory uncertainties.

As investigations unfold, the merger's future remains uncertain. Brodsky & Smith's Jason Brodsky emphasized that "investors deserve transparency about the risks tied to Corvex's leadership and operations," while Halper Sadeh's Daniel Sadeh highlighted potential remedies, including increased merger consideration or enhanced disclosures according to the firms. For now, Movano's shareholders are caught in a crossfire of corporate strategy, legal action, and geopolitical tensions over AI hardware exports.