The U.S. Supreme Court on Wednesday ruled against shareholder lawsuits in a securities fraud lawsuit accusing artificial intelligence chipmaker Nvidia of misleading investors about how much of its revenue depended on volatile cryptocurrency markets. He avoided a decision on whether to allow the case to proceed.
The justices, who heard arguments in the case on November 13, agreed with a lower court that upheld a 2018 class action lawsuit led by Stockholm, Sweden-based investment management firm E. Ohman J:or Fonder AB. NVIDIA's appeal against the judgment was dismissed. To move forward.
The Supreme Court decided that the case should not have been allowed and chose not to resolve the underlying legal dispute.
The lawsuit leaves the lower court's ruling in place.
The Supreme Court's rejection came in a one-line order without any explanation.
During arguments, some justices expressed reluctance to intervene in the case.
They question whether there are clear legal issues to be decided, rather than just disputes over facts, and given the technical complexity, they are not in an ideal position to resolve the case. It was shown that
The issue is that the plaintiffs cleared strict legal hurdles for filing private securities fraud lawsuits under a 1995 federal law called the Private Securities Litigation Reform Act, which was designed to eliminate frivolous lawsuits. It was whether or not.
The plaintiffs allege that Nvidia and its CEO, Jensen Huang, made statements in 2017 and 2018 that falsely downplayed the percentage of Nvidia's revenue growth from crypto-related purchases. He was accused of violating federal law.
As the price of certain cryptocurrencies rise in 2017, Nvidia's chips have become increasingly popular in cryptomining, the process of running complex mathematical formulas to secure cryptocurrencies such as Bitcoin and Ether. It has increased.
By late 2018, NVIDIA's revenue was lower than expected, and its stock price fell in early November of the same year, as crypto profitability declined.
The plaintiffs accused Nvidia and its executives of concealing the impact of cryptomining on the company's business.
The lawsuit seeks unspecified monetary damages aimed at recovering the lost value of investors' NVIDIA stock.
Nvidia will pay $5.5 million to US authorities in 2022 to resolve accusations that it failed to properly disclose the impact of cryptomining on its gaming business, without admitting or denying the findings of federal regulators Agreed.
A federal judge dismissed the lawsuit, but the San Francisco-based Ninth Circuit Court of Appeals later reinstated the case.
The Ninth Circuit allowed the case to proceed, finding that the plaintiffs properly alleged that Huang “made false or misleading statements and did so knowingly or recklessly.”
Nvidia told the Supreme Court that the plaintiffs had failed to adequately prove that the company statements at issue were false or that the company knowingly or recklessly misled investors, as required by law. he claimed.
Plaintiffs say their lawsuit contains strong enough allegations, gleaned from former employees, market analysis, and expert opinion, to overcome NVIDIA's termination request and advance to the discovery stage of the lawsuit. I objected.
President Biden's administration sided with shareholders in this case.
The Nvidia dispute was one of two cases filed in the Supreme Court in November involving proper private litigants seeking to hold companies liable for alleged securities fraud.
The other case, involving Mr. Mehta's Facebook page, was argued on Nov. 6 and also dismissed by a judge on Nov. 22.
