The Securities and Exchange Commission and the United States Department of Justice urged the Supreme Court to continue with the Nvidia securities fraud lawsuit
The U.S. has an interest in the Nvidia case because it pertains to the requirements for “pleading falsity and scienter in private securities-fraud class actions under the Private Securities Litigation Reform Act of 1995,” according to U.S.
Solicitor General Elizabeth Prelogar and SEC senior lawyer Theodore Weiman in an amicus brief document submitted on October 2.
Both agencies contended that the class action contained “sufficient details” to justify its reopening despite a prior court dismissal in 2021. They also suggested that the Supreme Court should authorize its revival by an appeals court.
“The United States therefore has a strong interest in the proper construction of the PSLRA and has previously participated as amicus curiae in cases regarding the interpretation and application of the PSLRA.”
– The U.S. Department of Justice
On the same day, 12 former SEC officials submitted a distinct amicus brief supporting the class action lawsuit. The brief underscored the significance of private enforcement of federal security laws in maintaining the integrity of U.S. capital markets.
Additionally, they asserted that Nvidia’s objections to the case necessitated the class group to have access to “internal company documents and databases before discovery and to preclude the use of experts at the pleading stage.”
In the brief, the former officials also stated that “the law or good policy supports neither.”
Nvidia is currently facing allegations of crypto misrepresentation.
Furthermore, the class group was supported by six additional amicus briefs filed on Oct. 2 by the American Association for Justice, institutional investors, legal professors, quantitative experts, and the Anti-Fraud Coalition.
2018 marked the initial class action lawsuit filing against Nvidia and its CEO, Jensen Huang.
The plaintiffs accused investors of being misled by Nvidia’s representation of the percentage of its sales that are allocated to cryptocurrency-related activities.
The plaintiff group contended that the company violated the U.S. Securities Exchange Act of 1934 by issuing public statements that were materially false or misleading regarding the extent to which Nvidia’s sales revenues were contingent upon crypto mining.
The lawsuit was dismissed in 2021; however, it was restored in a 2-1 ruling by the Ninth U.S. Circuit Court of Appeals, which is located in San Francisco. In 2022, Nvidia consented to pay $5.5 million to resolve allegations with U.S. authorities.
The allegations alleged that the company failed to adequately disclose the impact of crypto mining on its gaming business.
Nvidia executive vice president Colette Kress announced in a 2022 second-quarter earnings call that the company intends to completely exit the crypto space as a result of the significant decline in revenue generated by their crypto-related activities.
Subsequently, the company intends to exit the crypto space.
Nvidia anticipated that its crypto-mining equipment manufacturing would generate more than $400 million in revenue in 2018, but it only achieved 18% of the anticipated revenue.