U.S. Supreme Court rejects Nvidia's appeal, securities fraud lawsuit will continue

The U.S. Supreme Court has made a major ruling, rejecting an appeal by artificial intelligence chipmaker Nvidia. The decision means the company will not be able to avoid a securities fraud lawsuit filed by shareholders who accused Nvidia of misleading investors and overstating its sales dependence on the volatile cryptocurrency market. After hearing arguments in the case, which has been heard multiple times, the Supreme Court chose not to make a direct ruling on the legal dispute, but instead upheld a lower court's decision to allow the class action lawsuit filed in 2018 to proceed. The Supreme Court's dismissal order was brief and did not provide any explanation, containing only one line. During the arguments, some justices expressed reservations about intervening in the case. They believed that the case involved more factual disputes than clear legal issues, and given the technical complexity of the case, the Supreme Court was not the ideal forum to resolve such disputes. At the heart of the dispute is whether the plaintiffs met the higher legal threshold set by the Private Securities Litigation Reform Act of 1995, which is designed to screen and exclude frivolous lawsuits. The plaintiffs accused Nvidia and its CEO Jensen Huang of violating the Securities Exchange Act of 1934 with statements made during 2017 and 2018, claiming that the statements falsely downplayed the proportion of crypto-related purchases in Nvidia's revenue growth. As cryptocurrency prices rose in 2017, Nvidia's chips became popular in the crypto mining field. However, by the end of 2018, Nvidia's revenue failed to meet expectations due to the decline in cryptocurrency profitability, causing its stock price to fall sharply. The lawsuit seeks unspecified monetary damages to compensate investors for the loss of value they suffered from holding Nvidia shares. It is worth noting that in 2022 Nvidia agreed to pay US authorities $5.5 million to resolve allegations that it did not properly disclose the impact of crypto mining on its gaming business, but at the time the company did not admit or deny the findings of federal regulators. After a series of legal proceedings, the U.S. Court of Appeals for the Ninth Circuit in San Francisco reinstated the shareholders' lawsuit, holding that the plaintiffs had sufficiently accused Huang of "intentionally or recklessly making false or misleading statements." However, Nvidia was dissatisfied with this and appealed to the Supreme Court. Unfortunately, the Supreme Court did not support its appeal. (Reuters)