Supreme Court declines Nvidia appeal in securities fraud case
In a legal battle after investor fraud allegations.
The US Supreme Court has dismissed an appeal by Nvidia, rejecting its attempt to block a securities fraud lawsuit accusing the chipmaker of misleading investors about its reliance on the volatile cryptocurrency market. The decision upholds a lower court’s ruling, allowing a 2018 class-action lawsuit led by Swedish investment firm E. Ohman J:or Fonder AB to proceed. The justices, offering no explanation in their one-line order, had previously expressed hesitation about addressing the case’s technical and factual complexities during November arguments.
The lawsuit centres on allegations that Nvidia’s leadership, including CEO Jensen Huang, downplayed how much of the company’s 2017-2018 revenue growth stemmed from crypto-related purchases. Nvidia’s chips gained popularity during the cryptocurrency boom but faced a sales slump when the market cooled in late 2018, leading to a drop in the company’s stock price. A federal judge initially dismissed the case, but the Ninth Circuit Court of Appeals revived it, concluding that plaintiffs sufficiently alleged Nvidia knowingly made misleading statements.
Nvidia has denied wrongdoing and vowed to continue its defence, emphasising the need for clear standards in securities litigation to protect shareholders. However, the plaintiffs argue their case is well-supported by expert analysis and insider accounts. Deepak Gupta, representing the shareholders, called the Supreme Court’s dismissal a victory for corporate accountability. President Biden’s administration backed the investors, reflecting broader concerns about corporate transparency in securities practices.
This case mirrors another recent Supreme Court decision involving Meta, where justices also dismissed a securities fraud lawsuit. Both rulings highlight the challenges of navigating legal thresholds for investor class actions under stringent US securities laws.