Nvidia and Jensen Huang now face shareholder lawsuits

Nvidia and CEO Jensen Huang face shareholder suits alleging they misled investors.

A complaint filed in federal court in San Jose, California, alleges Nvidia and Huang misled shareholders about his alleged affair with Alice Huang, who is not related to him and is a former executive of Singapore-based Megaspeed. The shareholders also claim the defendants did not disclose that the matter raised national security concerns. According to The Guardian, the shareholders are led by retail investor Mark Kistenmacher and seek unspecified damages. Tom's Hardware reports that Rosen Law Firm filed the first class action, and that other law firms have announced their own investigations.

The Guardian reports the suit was filed five minutes after the US market closed Monday, when Nvidia shares closed down 4.3%, cutting about $190bn from market value. The New York Times reported on the alleged relationship last month and said US authorities had concluded Alice Huang was a Chinese intelligence asset, per The Guardian. Nvidia said Sunday it is conducting an independent investigation. Huang wrote in an open letter that he supports the investigation and will cooperate fully. Nvidia said Megaspeed has been no different than many other regional cloud customers.

These are allegations in shareholder complaints, not findings by a court. Nvidia and Huang have not been found liable. Watch for the outcome of Nvidia's investigation and further filings.

“I support the investigation and will cooperate fully. I love our country and our company.”Jensen Huang, Nvidia CEO, open letter

The facts we checked

According to The Guardian (with Reuters) and Tom's Hardware. The claims are allegations in shareholder complaints, not findings by a court. Nvidia and Huang have not been found liable.

1. Shareholders have sued Nvidia and CEO Jensen Huang over his alleged affair with Alice Huang, who is not related to him.Fact · The Guardian; Tom's Hardware
2. A complaint filed in federal court in San Jose, California, alleges Nvidia and Huang misled shareholders about the alleged affair with Alice Huang, a former executive of Singapore-based Megaspeed.Alleged · The Guardian
3. The shareholders claim the defendants did not disclose that the matter raised national security concerns and threatened Nvidia's reputation and business prospects.Alleged · The Guardian
4. The Guardian says the shareholders are led by Mark Kistenmacher, a retail investor, and seek unspecified damages.Reported · The Guardian
5. The Guardian says the suit was filed five minutes after the US stock market closed on Monday, when Nvidia shares closed down 4.3%, cutting market value by about $190bn.Reported · The Guardian
6. Tom's Hardware reports that the Rosen Law Firm filed the first class-action suit. It claims Nvidia and Huang failed to disclose or misled investors about the affair, lied about it when asked, and raised national security concerns.Alleged · Tom's Hardware
7. The New York Times reported on the alleged relationship last month and said US authorities had concluded Alice Huang was a Chinese intelligence asset.Reported · The Guardian
8. Huang told Nvidia employees he had been unfaithful to his wife, without disclosing details of the alleged relationship.Reported · The Guardian
9. Nvidia said on Sunday it was conducting an independent investigation into reports that Huang was the 'target of a foreign intelligence effort'.Reported · The Guardian
10. I support the investigation and will cooperate fully. I love our country and our company. I am committed to protecting Nvidia and supporting America's national security. (Huang, open letter on Nvidia's website)Quote · The Guardian
11. Megaspeed has been no different than many other regional cloud customers. Meetings with customers are part of a CEO's job; Jensen talks with thousands of customer executives every year. (Nvidia statement)Quote · Tom's Hardware
12. Trump said at a White House briefing that the FBI is looking into the matter, and that Huang told him 'he had absolutely no idea that the person in question was a spy'.Quote · The Guardian
13. The Guardian says it is common for shareholders to sue companies after unexpected share price declines.Reported · The Guardian
14. Other law firms have announced their own investigations of Nvidia, according to Tom's Hardware.Reported · Tom's Hardware

Sources

• The GuardianNvidia and Jensen Huang sued by shareholders over affair with alleged Chinese spy
• Tom's HardwareLaw firm files class-action lawsuit against Nvidia after CEO Jensen Huang confirms affair with alleged Chinese spy