Nvidia and Chief Executive Jensen Huang were sued on Monday in a proposed class action that accuses them of defrauding shareholders by concealing Huang’s ties to a suspected Chinese spy.
Nvidia share drop and lawsuit details
The complaint, filed in federal court in San Jose, California, alleges the defendants misled shareholders about Huang’s alleged affair with Alice Huang, a former executive of Singapore-based Megaspeed who is not related to him, and did not disclose that the matter raised national security concerns that threatened Nvidia’s reputation and business prospects. A report last month said U.S. authorities had concluded Alice Huang was a Chinese intelligence asset.
Nvidia announced a probe into the matter on Sunday. Its shares closed down 4.3 percent on Monday, reducing the company’s market capitalization by approximately US$190 billion; the lawsuit was filed five minutes after the U.S. stock market closed.
Jensen Huang told Nvidia employees he had been unfaithful to his wife, without disclosing details of the alleged relationship. Huang co-founded Nvidia and has led the Santa Clara, California-based company as it became the world’s most valuable chipmaker, making him one of the most prominent symbols of the artificial intelligence boom.
Nvidia did not immediately respond to a request for comment. The proposed class action, led by shareholder Mark Kistenmacher, seeks unspecified damages from the defendants. It is common for shareholders to sue companies after unexpected share price declines.
