⚖️ Nvidia, Jensen Huang face shareholder suit over Megaspeed

A shareholder sued Nvidia and its CEO, Jensen Huang, on Monday, Nov 9, in a California court, AP reports. The complaint asks to represent anyone who bought Nvidia shares between Oct 9 and Nov 8, and says the company misled investors about Huang's relationship with Alice Huang. The reports read give no filing time and name the court only as "a California court".

Who says what

The named plaintiff is Mark Kistenmacher, whom AP describes as a retail investor. He seeks unspecified damages and a jury trial, per AP. No other plaintiff, no judge and no case number appear in the reports read, so there are no lead plaintiffs to report yet.

The theory, as AP summarizes it: news reports said the Commerce Department was investigating Megaspeed, Alice Huang's Singapore-based company, over suspicions it helped sidestep U.S. export limits on chips bound for China. Nvidia answered then that its compliance team had checked and found nothing illegal. The complaint says those statements misled because they were made while Jensen Huang was having an affair with Alice Huang, who it says is "suspected of seeking to help smuggle Nvidia products into China." It accuses both defendants of failing to disclose the affair, which it says posed a "material risk" to Nvidia's reputation and business prospects.

"“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,”"

the complaint, as quoted by AP

That is all the stock drop the filing excerpts supply: no dollar loss of its own. The complaint also says that had investors known the truth, they would not have bought "at the artificially inflated prices that they did, or at all."

The market numbers come from the reports, not the complaint. AP says Nvidia shares fell $7.97, or 4.3%, on Monday, wiping out about $190 billion in market value. The Los Angeles Times puts the fall at about 5%, to roughly $177. NBC News reports a drop of more than 4% and almost $200 billion. Three outlets, three roundings.

The suit sits beside two other proceedings. Per NBC News and the BBC, Nvidia's board said Nov 8 that a committee of independent directors, assisted by outside independent counsel, will run an investigation. On Capitol Hill, the BBC reports that three House Republican committee leaders asked Huang to appear later this month about Nvidia's security protocols. The Financial Times reports Sen. Chris Coons pledged an investigation, and AP says Sen. Mark Warner and Rep. Hakeem Jeffries said Monday they are interested in investigating further. AP also reports that Megaspeed bought more than $4.8 billion worth of Nvidia chips over two years, according to The New York Times.

The response

Nvidia did not immediately respond to AP's request for comment on the suit, and no public response to it was found in the other reports read. Huang's letter, posted on Nvidia's website per AP, says: "I support the investigation and will cooperate fully." Nvidia's board said it has "no reason to believe" national security or company secrets were compromised, per NBC News.

The earlier record is on file too. Axios reports Nvidia had repeatedly denied that Huang's relationship with Alice Huang was anything but a typical business contact. NBC News quotes Huang as saying earlier that his interactions "have been related to Megaspeed, and it was all completely normal and not unusual." His Sunday memo, per NBC, says: "I was unfaithful to my wife."

Others have weighed in. China's Foreign Ministry spokesperson Guo Jiakun called the spy allegation "unsubstantiated" and "nothing but smears against China," per NBC News. Megaspeed told The New York Times it "cannot respond to a media trial and welcomes formal, evidence-based investigation," the Los Angeles Times reports. AP says President Trump told a White House briefing the FBI is "looking into" the matter, and that he does not think Huang needs to worry.

What happens next

No hearing date, response deadline or judge is reported for the suit. The board investigation has no reported end date. The one dated item is Nov. 11: Axios reports the Republican chairmen who requested a briefing gave Huang that deadline to set a date for the meeting.

Backstory

MrMoney's earlier files cover the board's move, “🤖 Nvidia board opens Jensen Huang probe; shares seen 4% lower,” and the congressional side, “🤖 Congress presses Nvidia's Jensen Huang over Megaspeed claims.” This suit is the first shareholder filing in that sequence. Separately, in May 2022 the SEC said Nvidia failed to disclose cryptomining's role in its revenue growth; per Reuters, the company paid a $5.5 million penalty without admitting or denying the findings. Different matter, same subject: what investors were told.

As of Nov 10, 1:19 PM ET, the filing of the complaint is confirmed by AP, while its allegations are untested. Nvidia's board investigation is open, and Huang has acknowledged infidelity in his own words. Pending: Nvidia's response to the suit, any court schedule, the House briefing date due Nov. 11, and the findings of the board's inquiry.