The U.S. Supreme Court on Wednesday rejected a decision on whether to allow shareholders to proceed in a securities fraud lawsuit accusing artificial intelligence chip maker Nvidia of misleading investors about how much of its Depends on sales. Volatile Cryptocurrency Market,
The judges, who heard arguments in the case on Nov. 13, rejected Nvidia’s appeal against a lower court ruling that allowed the 2018 class action — Stockholm, Sweden-based investment management firm E. Ohman J: or Fonder AB Sue in the lead – to move forward.
The Supreme Court chose not to resolve the underlying legal dispute, determining that the case should not have been allowed.
Its action upholds the lower court’s decision.
The Supreme Court’s dismissal came in a one-line order with no explanation.
During the arguments, some judges expressed their objection to interfering in the case.
He wondered whether there was a clear legal issue for him to decide, rather than just a dispute over the facts, and indicated that given the technical complexities of the case he was not ideally placed to adjudicate the case. .
The issue was whether plaintiffs had cleared the increased legal hurdle for bringing private securities fraud lawsuits under a 1995 federal law called the Private Securities Litigation Reform Act, which is intended to eliminate frivolous litigation. .
The plaintiffs accused Nvidia and its CEO Jensen Huang of violating a 1934 federal law called the Securities Exchange Act by making statements in 2017 and 2018 that misrepresented how much Nvidia’s revenue growth Came from crypto-related purchases.
Beginning in 2017, as the price of some cryptocurrencies rose, Nvidia’s chips became increasingly popular for cryptomining, a process that involves executing complex math equations to mine cryptocurrencies like Bitcoin and Ether.
By the end of 2018, amid declining crypto profitability, Nvidia’s revenues fell short of its projections, leading to a decline in its stock price in early November that year.
The plaintiff accused Nvidia and its top executives of hiding the impact of cryptomining on its business.
The lawsuit seeks unspecified monetary damages to compensate for the lost value of Nvidia stock held by investors.
In 2022 Nvidia agreed to pay $5.5 million to US authorities to settle charges that it did not properly disclose the impact of cryptomining on its gaming business, but without admitting or denying federal regulators’ findings.
A federal judge dismissed the suit but the San Francisco-based 9th US Circuit Court of Appeals later revived it.
The 9th Circuit found that the plaintiffs had sufficiently alleged that Huang “made false or misleading statements and did so knowingly or recklessly”, allowing their case to proceed.
Nvidia argued in the Supreme Court that the plaintiffs failed to adequately show that the corporate statements at issue were false, or that the company intentionally or negligently misled investors, as required by law.
The plaintiffs countered that their lawsuit contained strong enough allegations – derived from former employees, market analysis and expert opinions – to survive Nvidia’s request for dismissal and advance to the discovery phase of the litigation.
President Biden’s administration supported shareholders in the case.
The Nvidia dispute was one of two cases coming before the Supreme Court in November involving private plaintiffs seeking the right to hold companies liable for alleged securities fraud.
Second, involves There was a debate on Meta’s Facebook on November 6. And was similarly rejected by the judges on November 22.
