Supreme Court Weighs Nvidia's Fate in Securities Fraud Case
The U.S. Supreme Court is reviewing Nvidia's appeal in a securities fraud case. Investors claim Nvidia misled them about its earnings' dependency on cryptocurrency, while Nvidia argues the lawsuit lacks substantiated allegations. The decision could influence future securities fraud litigation.
The U.S. Supreme Court is poised to hear critical arguments on Wednesday regarding Nvidia's attempt to dismiss a securities fraud lawsuit. The case accuses the artificial intelligence chipmaker of deceiving investors about its sales' reliance on the volatile cryptocurrency market.
The legal battle emerges from a 2018 class action led by Swedish investment firm E. Ohman J:or Fonder AB. Plaintiffs contend that Nvidia misrepresented its financial health, affecting stock value. Nvidia refutes these claims, arguing plaintiffs haven't sufficiently demonstrated any false statements as required under the 1995 Private Securities Litigation Reform Act.
As cryptocurrencies' value surged in 2017, Nvidia's chips soared in popularity for cryptomining. However, by late 2018, declining crypto profitability led to a revenue shortfall and subsequent stock price drop. President Biden's administration supports the plaintiffs, and the outcome of this case, along with a similar one against Facebook, could set new precedents in securities fraud accountability.
(With inputs from agencies.)
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