Nvidia faces shareholder lawsuit over CEO disclosure and alleged China security risk
A proposed class action targets Nvidia and Chief Executive Jensen Huang after a sharp drop in the chipmaker's share price added pressure to scrutiny around the company. The complaint alleges shareholders were misled about Huang's ties to a woman U.S. authorities identified as a Chinese intelligence asset, raising concerns about reputational and business damage.
Highlights
- Nvidia and CEO Jensen Huang face a federal shareholder lawsuit alleging nondisclosure of Huang's affair with Alice Huang, claimed to be a Chinese intelligence asset.
- Nvidia shares fell 4.3% on Monday, wiping about $190 billion from market value, following revelations and the company's announcement of an internal probe.
- Plaintiffs seek unspecified damages, as the lawsuit alleges national security and reputational risks threaten Nvidia's business amid heightened scrutiny of corporate governance.
Court filing follows report and internal probe
As reported by Reuters, the lawsuit was filed Monday in federal court in San Jose, California, accusing Nvidia and Huang of defrauding shareholders by failing to disclose his alleged affair with Alice Huang, a former executive at Singapore-based Megaspeed who is not related to him.The complaint says the defendants concealed a relationship that allegedly created national security concerns and threatened Nvidia's reputation and business prospects. The New York Times reported last month on the alleged relationship and said U.S. authorities had concluded Alice Huang was a Chinese intelligence asset.
Nvidia did not immediately respond to a request for comment. Jensen Huang told employees he had been unfaithful to his wife, but did not disclose details of the alleged relationship.
Share price hit and broader corporate stakes
Nvidia said on Sunday it had opened a probe into the matter. Its shares closed down 4.3% on Monday, wiping about $190 billion from the company's market value, and the lawsuit was filed five minutes after the U.S. stock market closed.Shareholder suits often follow unexpected stock declines, especially when investors argue a company withheld material information. The plaintiffs, led by Mark Kistenmacher, are seeking unspecified damages from Nvidia and Huang.
Huang co-founded Nvidia and has led the Santa Clara, California-based company as it became the world's most valuable chipmaker. His profile has also made him one of the most visible corporate figures tied to the artificial intelligence boom, increasing the potential reputational and governance impact of the case.
Earlier, we reported that Janus Henderson and Centrifuge launched JQQQ, a blockchain-native fund offering digital access to the Nasdaq-100 Index.
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