Nvidia Could Face Class Action Backed by SEC, DOJ
The DOJ and SEC say they have “sufficient evidence” to ask the Supreme Court to revive a class action lawsuit against Nvidia that was dismissed in 2021.
According to an amicus brief filed with the Supreme Court on October 2 by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), both agencies support “reviving” a class action lawsuit filed by investors against Nvidia in 2018.
Amicus briefs are typically filed by individuals or organizations not involved in the lawsuit, but who are authorized to assist the court in providing information related to the case, to be submitted to the appellate court to consider legal claims.
In that filing, U.S. Attorney General Elizabeth Prelogar and SEC senior counsel Theodore Weiman argued that the case had “sufficient merit” to overcome the district court’s earlier dismissal, and urged the Supreme Court to “greenlight” the case.
The agencies said they had a “strong interest” in the case because it involved laws designed to limit meritless securities lawsuits.
The US DOJ and SEC told the Supreme Court that the Nvidia investor class action lawsuit should be approved. The investor group tried to sue Nvidia in 2018, accusing it of concealing more than $1 billion in GPU sales to crypto miners. https://t.co/AqM1tbjmhA
— Wu Blockchain (@WuBlockchain) October 4, 2024
Recalling past lawsuits, in 2018 a group of investors attempted to sue Nvidia, accusing the company of “hidden” more than $1 billion in GPU sales to crypto miners.
They alleged that Nvidia’s huge profits were fueled by crypto miners, not by demand from gamers as the company claimed in its financial reports. This was further evident when the company’s sales “plummeted” during the crypto market downtrend in 2018-2019.
They also claimed that the chipmaker’s CEO, Jensen Huang, downplayed the importance of sales to the crypto industry.
The case was initially dismissed by the California District Court in 2021 in favor of the GPU maker, but the investors appealed, leading to the 9th Circuit Court of Appeals reinstating the case last August.
Nvidia later filed a petition asking the Supreme Court to overturn the decision, claiming the lawsuit made false statements about the company's business and earnings.
But the DOJ and SEC countered, saying they "have ample evidence to support their case, including testimony from a former CEO and a report from the Bank of Canada showing the company understated its crypto revenue by $1.35 billion."
In another amicus brief the same day, 12 former SEC officials backed the investors, saying "private enforcement of federal securities laws is vital to the integrity of the U.S. capital markets," and rejecting Nvidia's arguments.
Not only did the SEC and DOJ file amicus briefs asking the Supreme Court to reinstate the case, on the same day, October 2, there were 6 additional amicus briefs supporting the investor group from quantitative experts, law professors, institutional investors, the American Association for Justice (AAJ) and the Anti-Fraud Coalition.
However, this is only a request submission, it is necessary to wait for approval from the Supreme Court to restart the lawsuit that was thought to have "ended" 3 years ago for Nvidia.
If this lawsuit is approved by the Supreme Court, it will likely be a "fatal blow" not only to Nvidia and other companies that are "ambiguous" in their financial reports, but also affect artificial intelligence (AI) coins that have "led the wave" of market growth in recent times thanks to this GPU manufacturer.
