Supreme Court Blow: NVIDIA Faces Renewed Legal Challenge Over Crypto Revenue Misrepresentation
1min read The U.S. Supreme Court recently dismissed NVIDIA's appeal regarding a significant securities fraud lawsuit, allowing the continuation of legal proceedings initiated by shareholders. These shareholders accuse the company of misleading investors by overstating its revenue's reliance on the volatile cryptocurrency market.
This legal battle, which commenced in 2018, was brought forth by E. Ohman J:or Fonder AB, an investment management firm based in Stockholm. The case centers around claims that NVIDIA, alongside its CEO Jensen Huang, violated the Securities Exchange Act of 1934 by making misleading statements about the extent to which cryptocurrency-related sales contributed to their revenue growth in 2017 and 2018.
Despite significant arguments presented on November 13, the Supreme Court opted not to intervene, deeming the case more of a factual dispute rather than a clearly defined legal issue. This decision aligns with the lower court's ruling, permitting the lawsuit to move forward without providing an explicit rationale.
NVIDIA has faced allegations of falsely projecting its revenue expectations, particularly after experiencing a decline when the cryptocurrency market's profitability waned in late 2018, resulting in a sharp drop in NVIDIA's stock value. The plaintiffs are seeking unspecified monetary damages for the financial losses incurred by holding NVIDIA stocks during this period.
Previously, NVIDIA agreed to a $5.5 million settlement with U.S. authorities in 2022 concerning allegations of nondisclosure of crypto mining impacts on its gaming business, without admitting to federal regulators' findings.
The Ninth Circuit Court of Appeals reinstated the shareholders' case against NVIDIA, supporting the stance that sufficient evidence exists to suggest potentially misleading or deceptive statements were made by the company's leadership, including CEO Jensen Huang. NVIDIA, in response, expressed disappointment and took their appeal to the Supreme Court, which unfortunately was to no avail.
NVIDIA maintains its stance, prepared to defend against the allegations. A spokesperson reiterated the importance of consistent and predictable standards in securities litigation for shareholder protection and economic strength, emphasizing the company's resolve in continuing its defense.
The plaintiffs counter that their lawsuit, bolstered by internal testimonies, market analysis, and expert witnesses, carries enough weight to warrant further investigation and has surpassed NVIDIA's motions for dismissal.
This ongoing case against NVIDIA highlights the broader legal landscape where shareholder rights to hold public companies accountable for alleged securities fraud receive increasing scrutiny. It remains a key example of the balance between investor protection and corporate accountability in the tech industry.
