Shareholder lawsuits begin against Nvidia and CEO Jensen Huang
After Nvidia's board announced an investigation of CEO Jensen Huang, the stock fell more than 4% and the first investor complaint was filed in a U.S. court. Legal experts see it as the start of a securities fraud case.
Shares of U.S. chipmaker Nvidia fell more than 4% on Monday, Nov. 9, the first trading day after the board said it would investigate CEO Jensen Huang over his relationship with Alice Huang, an executive whom U.S. intelligence believes was spying for China. Investor lawsuits could now become a costly problem for the company.
On Monday at least four law firms, including Schall, Brown & Schwartz and Levi & Korsinsky, announced investigations into whether Nvidia misled investors. In the afternoon a complaint was filed in the Northern District of California, where Nvidia is headquartered. It was brought by Rosen Law Firm, a New York firm specializing in securities class actions, on behalf of Mark Kistenmacher, a retail investor who made seven purchases totaling roughly $20,500 this year.
What the complaint alleges
The proposed class covers anyone who bought Nvidia securities between Oct. 9, 2025, and Nov. 8, 2026. Nvidia and Huang are the defendants. The suit says they misled investors about Huang's ties to Megaspeed, a Singapore-based data center company where Alice Huang was considered a top executive. It cites three statements: spokesperson John Rizzo's claim that Huang's interactions with her were "not unusual or unexpected," an earlier statement that the company found "no evidence of diversion" of its chips, and Huang's Oct. 30 comment to Bloomberg that dealings with Megaspeed were "normal and not unusual." The complaint says all were false or misleading because Huang was having an affair with Alice Huang. Kistenmacher seeks unspecified damages, interest and attorneys' fees, and a jury trial.
What the expert says
Robert Bartlett, a Stanford Law professor and securities law expert, predicts a "classic fraud on the market" claim, in which investors argue they paid prices based on false or incomplete information. He called the company's earlier statement "clearly a misleading statement" and said a CEO's knowledge is imputed to the company. Damages are tied to the stock decline, which on Monday was $7.97 per share, or 4.27%. A settlement typically means a large payment from the company and its directors-and-officers insurers, but usually no personal consequences for the CEO.
Bartlett also pointed to governance questions about what the board knew, and possible government action, though he doubts the current SEC would pursue it. A filing does not signal a strong case, and the court will choose the lead plaintiff.
