By John Kruzel
WASHINGTON (Reuters) – The U.S. Supreme Court on Monday agreed to a bid by Nvidia to end a securities fraud lawsuit accusing the artificial intelligence chipmaker of misleading investors about how much of its sales went to the volatile cryptocurrency industry .
The justices took up Nvidia’s appeal after a lower court revived a proposed class action brought by California shareholders against the company and its CEO Jensen Huang. The lawsuit, led by Stockholm, Sweden-based investment manager E. Ohman J:of Fonder AB, seeks unspecified monetary damages.
Santa Clara, California-based Nvidia is a high-flying company that has become one of the biggest beneficiaries of the AI boom, and its market value has soared.
In 2018, Nvidia’s chips became popular for crypto mining, a process that involves performing complex mathematical equations to secure cryptocurrencies such as bitcoin.
Plaintiffs in a 2018 lawsuit accused Nvidia and top company officials of violating a U.S. law, the Securities Exchange Act of 1934, by making statements in 2017 and 2018 that falsely downplayed how much of the company’s revenue growth Nvidia emerged from crypto-related purchases.
These omissions misled investors and analysts interested in understanding the impact of crypto mining on Nvidia’s business, the plaintiffs said.
U.S. District Judge Haywood Gilliam Jr. dismissed the lawsuit in 2021, but the San Francisco-based 9th U.S. Circuit Court of Appeals subsequently revived the lawsuit in a 2-1 ruling. The 9th Circuit ruled that the plaintiffs had adequately alleged that Huang had made “false or misleading statements and had done so knowingly or recklessly,” allowing their case to proceed.
Nvidia urged the justices to appeal, arguing that the 9th Circuit’s ruling would open the door to “abusive and speculative lawsuits.”
Nvidia agreed in 2022 to pay $5.5 million to US authorities to settle charges that it failed to properly disclose the impact of crypto mining on its gaming business.
(Reporting by John Kruzel; Editing by Will Dunham)
