TLDR
- US DOJ and SEC support class-action lawsuit against Nvidia in Supreme Court
- Lawsuit alleges Nvidia misrepresented $1+ billion in GPU sales to crypto miners
- Case was initially dismissed but revived by appeals court in August
- DOJ and SEC argue the suit has “sufficient details” to proceed
- 12 former SEC officials also filed a brief supporting the investors
The United States Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have thrown their support behind a class-action lawsuit against tech giant Nvidia.
The case, which has reached the Supreme Court, centers on allegations that Nvidia misrepresented over $1 billion in GPU sales to cryptocurrency miners.
The lawsuit, initially filed in 2018 by a group of Nvidia investors, claims that the company and its CEO, Jensen Huang, downplayed the extent of their sales to the crypto mining industry.
The investors argue that Nvidia’s sales were significantly boosted by miners, a fact that became apparent when the company’s sales dropped alongside the crypto market crash in 2018.
After being dismissed in a lower court, the case was revived by the Ninth Circuit appeals court in August. Nvidia then petitioned the Supreme Court to reverse this decision, leading to the current situation.
In an amicus brief filed on October 2, US Solicitor General Elizabeth Prelogar and SEC senior lawyer Theodore Weiman argued that the lawsuit contained “sufficient details” to survive a district court dismissal.
They urged the Supreme Court to allow the case to proceed, stating that the DOJ and SEC have a “strong interest” in the matter due to its relevance to laws designed to limit frivolous securities-related lawsuits.
The brief emphasized the importance of private actions in supplementing criminal prosecutions and civil enforcement actions by the DOJ and SEC.
It also addressed Nvidia’s claim that the suit relied on fabricated information, stating that this was not the case in this instance.
The investors’ rebuttal to Nvidia’s claims includes evidence from former Nvidia executives and a Bank of Canada report suggesting that the company understated its crypto revenue by $1.35 billion. This information has been acknowledged by the DOJ and SEC in their brief.
In a separate but related development, 12 former SEC officials filed their own amicus brief in support of the investors. They stressed the vital role of private enforcement in maintaining the integrity of US capital markets.
The former officials criticized Nvidia’s arguments, stating that they would create rules requiring plaintiffs to possess internal company documents before discovery and prevent the use of experts at the pleading stage.
Six additional amicus briefs supporting the investor group were also filed on October 2. These came from various parties including quantitative experts, legal professors, institutional investors, the American Association for Justice, and the Anti-Fraud Coalition.
