The United States Justice Department (DOJ) and the Securities and Exchange Commission (SEC) have urged the Supreme Court to allow a class-action lawsuit against Nvidia investor to proceed. The case alleges that the technology giant misrepresented its sales to cryptocurrency miners, impacting investor decisions.
Why is the Nvidia Investor Class-Action Lawsuit?
The investment group and Nvidia have been engaged in a legal struggle since 2018, and it has now made its way to the nation’s top court. US Solicitor General Elizabeth Prelogar and SEC senior lawyer Theodore Weiman claimed in an amicus brief filed on October 2 that the complaint had “sufficient details” to justify an appeals court’s resurrection, allowing it to continue in district court.
The DOJ and SEC indicated a keen interest in the matter, emphasising that it contains regulations aimed at reducing frivolous securities-related actions.
In their brief, they underlined the value of meritorious private lawsuits and stated that they are essential to the success of both civil enforcement initiatives and criminal prosecutions.
The investment group initially brought the complaint in 2018, claiming that Nvidia had sold cryptocurrency miners GPUs for more than $1 billion while hiding the sales. They stated that Nvidia’s sales to the cryptocurrency industry greatly bolstered the company’s financial performance, although CEO Jensen Huang downplayed these purchases. As proof of their assertions, the group cited Nvidia’s 2018 sales drop, which coincided with a decline in the cryptocurrency industry.
Former SEC Officials Come Out in Support of Investors
The investor group’s rebuttals were also accepted by the agencies, who cited evidence from former Nvidia executives and a Bank of Canada analysis indicating that the company had underestimated its cryptocurrency sales by about $1.35 billion.
Twelve former SEC officials backed the investors in a different amicus brief submitted that same day, arguing that private enforcement of federal securities rules is essential to preserving the integrity of the US financial markets.
Nvidia’s claims were met with criticism, as it was suggested that they would place undue burdens on the plaintiffs by restricting the use of expert views during the pleading stage and demanding access to internal documents before discovery.
Additional support for the investor group came from six more amicus briefs filed on October 2, including endorsements from quantitative experts, legal professors, institutional investors, the American Association for Justice, and the Anti-Fraud Coalition.
In the meantime, Nvidia is focusing on expanding its partnership with technology consultant Accenture, aiming to drive the adoption of artificial intelligence (AI) within businesses and boost orders for its products.