Emily Walker
A major American semiconductor manufacturer has been unsuccessful in halting a class action lawsuit from 2018 after the higher court rejected its appeal. Nvidia is now facing legal challenges related to accusations of misleading its shareholders regarding cryptocurrency-related revenue.
Appeal Rejected
The US Supreme Court has decided not to review Nvidia’s appeal related to a securities fraud case. This means the earlier decision by a lower court allowing the 2018 class action suit to progress is upheld.
Nvidia sought the Supreme Court’s intervention to avoid the cryptocurrency fraud accusations leveled against it by its shareholders.
Shareholders have claimed that Nvidia misrepresented the extent of its reliance on the fluctuating cryptocurrency market, alleging a lack of transparency in its disclosures.
Lawsuit Advances
With the Supreme Court’s refusal to hear Nvidia’s appeal, the previously made ruling by the lower court will remain effective, obligating the chipmaker to confront the lawsuit.
The justices did consider the case but opted against making a judgment on the core legal matters involved, indicating they did not see a significant legal question for their determination, focusing instead on factual disagreements.
The Supreme Court’s dismissal of Nvidia’s appeal has set the stage for the 2018 case to proceed, which the company was attempting to avoid. The justices acknowledged the complex nature of the issues presented in this matter.
Fraud Allegations
In 2018, Nvidia gained recognition due to its involvement in cryptocurrency mining. That same year, shareholders initiated a lawsuit against the company for allegedly violating the Securities Exchange Act of 1934, contending that Nvidia misrepresented the contribution of its revenue growth from cryptocurrency activities during 2017 and 2018.
The shareholders maintain that by omitting critical information, Nvidia misled investors and analysts who were evaluating the impact of crypto mining on the company’s performance.
Although a federal judge initially dismissed the lawsuit in 2021, the 9th US Circuit Court of Appeals later reversed that decision, allowing the fraud claims to be reinstated.
Image credits to Morningstar; chart sourced from TradingView