Supreme Court to hear appeal against NVIDIA lawsuit

Published 2024-06-18 03:24

The Federal Supreme Court decided that NVIDIA Corporation (NASDAQ: NVDA) will examine an appeal aimed at dismissing securities fraud lawsuits filed by shareholders. This lawsuit alleges that a major tech company deceived investors about sales to the cryptocurrency field, and after being initially rejected, it was revived by a lower court.

Stockholm-based E. The lawsuit, led by Ohman J: or Fonder AB, alleges that Nvidia and CEO Jensen Huang modestly explained that the company relied on revenue from the volatile cryptocurrency industry, particularly from 2017 to 2018, and violated securities and exchange laws. The plaintiffs argue that Nvidia's inaction misled investors and analysts, particularly those trying to measure the impact of crypto mining on the company's business.

NVIDIA's technology, particularly the company's chips, gained popularity in 2018 for crypto mining, which ensures the safety of cryptocurrencies such as Bitcoin by solving complex mathematical problems. Amid the AI boom, the company's market value has grown significantly.

In the previous ruling, Federal District Judge Haywood Gilliam Jr. rejected the appeal in 2021. However, after that, the 9th Federal Circuit Court of Appeals in San Francisco acknowledged sufficient claims that Mr. Huang deliberately made false or misleading statements, and reinstated the lawsuit with a 2 to 1 ruling.

Nvidia argues that the 9th Circuit ruling could lead to a wave of speculative and abusive lawsuits. In 2022, NVIDIA settled 5.5 million dollars with the US authorities for not properly disclosing the impact of crypto mining on the game business.

The decision for the Supreme Court to hear Nvidia's appeal follows similar measures relating to Meta's private securities fraud lawsuit against Facebook (NASDAQ: META), and this lawsuit is also centered on information disclosure that causes misunderstandings among investors. Both NVIDIA and Facebook lawsuits are scheduled for the next term of the Supreme Court beginning in October.

This article was contributed by Reuters.