Nvidia is trying to avoid similar legal claims on a larger scale in the future, two years after agreeing to pay the Securities and Exchange Commission $5.5 million for not giving enough information about its business with the cryptocurrency industry.
The Supreme Court agreed on Monday to hear the AI giant’s appeal of a class-action lawsuit that said it lied to investors about how much of its income came from the “notoriously volatile” crypto industry. When it meets again in October 2024–2025, the High Court will decide the case.
If Nvidia wins, it might not have to deal with more shareholder lawsuits like this one. But if Nvidia loses, it could lead to a lot of similar claims against it and other companies that are being sued by their shareholders.
The Swedish investment firm E. Ohman J:or Fonder AB brought the class-action suit. They say that Nvidia misclassified the money it made from selling mining equipment to the crypto industry as gaming revenue for 15 months, from May 2017 to July 2018. This meant that the company didn’t report more than $1.1 billion in crypto mining revenue.
In 2021, a federal judge threw out the case, but the Ninth Circuit Court of Appeals in California, which is home to Nvidia, brought it back because the shareholders who filed it had good enough reasons to let it go forward.
Nvidia asked the Supreme Court to hear the case and said that federal rules meant to stop pointless lawsuits should apply because the shareholders did not meet certain legal requirements set by the Private Securities Litigation Reform Act, which was passed by Congress in 1995.
In particular, it said that the experts’ assumptions were just guesses and that the 2022 SEC settlement didn’t show that anyone knew or was careless. Lawyers for Nvidia also say that the Ninth Circuit’s decision could lead to case-by-case litigation.
Barron asked Nvidia for a comment, but they said no. E. Ohman J:or Fonder AB didn’t answer right away.
Nvidia has been having a great run lately. On June 5, its stock reached $3 trillion in market value for the first time. On June 7, it completed a 10-for-1 split. After three days of gains, shares fell 0.7% on Monday to close at $130.98. However, they are still up 164% for the year.
