Supreme Court Decision: Investors Can Proceed with Class Action Against Nvidia
The Supreme Court has given the green light to a class-action lawsuit against Nvidia, accusing the company of misleading investors about its prior reliance on selling computer chips for cryptocurrency mining. This decision comes at a time when China is investigating Nvidia for suspected violations of anti-monopoly laws.
Justices heard arguments on Nvidia’s attempt to dismiss the lawsuit but ultimately decided to let the case proceed, upholding an appellate ruling. The lawsuit, initially filed in 2018 by a Swedish investment management firm, followed a decline in cryptocurrency profitability, causing Nvidia’s revenues to miss targets and its stock price to drop by 28%.
Despite Nvidia’s arguments to dismiss the lawsuit under the Private Securities Litigation Reform Act, a federal court in San Francisco ruled in favor of the investors, paving the way for the case to move forward. The Biden administration supported the investors’ position in this matter.
In 2022, Nvidia paid a $5.5 million fine to the Securities and Exchange Commission over allegations of failing to disclose the role of cryptomining in revenue growth from graphics processing units designed for gaming. The company settled without admitting wrongdoing.
Despite the recent China investigation news, Nvidia has seen remarkable performance, with its stock price up by 180% this year. Nvidia’s success in the artificial intelligence sector has made it one of the largest companies in the stock market, driven by demand from tech giants for its chips and data centers to power AI systems.
This lawsuit is one of two notable cases involving class actions against tech companies. The Supreme Court also dismissed an appeal from Meta, Facebook’s parent company, attempting to end a multi-billion-dollar investors’ lawsuit related to the Cambridge Analytica privacy scandal.
Overall, the Supreme Court’s decision allows the class-action lawsuit against Nvidia to proceed, with ongoing scrutiny over the company’s past actions related to cryptocurrency mining and its impact on investors.
