US Supreme Court Evaluates Nvidia’s Bid To Evade Securities Fraud Suit
The plaintiffs had accused the AI chipmaker and its CEO Jensen Huang of violating the Securities Exchange Act
By: : Daniel
Update: 2024-11-14 02:15 GMT
US Supreme Court Evaluates Nvidia’s Bid To Evade Securities Fraud Suit
The plaintiffs had accused the AI chipmaker and its CEO Jensen Huang of violating the Securities Exchange Act
The US Supreme Court has analyzed Nvidia's bid to avoid a securities fraud lawsuit, accusing it of misleading investors on how its sales depended on the volatile cryptocurrency market.
The judges heard the artificial intelligence (AI) chipmaker’s appeal against the lower court's decision allowing a 2018 class action litigation led by the Stockholm, Sweden-based investment management firm E. Ohman J: or Fonder AB to proceed.
It is one of two cases (the other is Meta's Facebook), heard recently by the top court that could lead to rulings making it harder for private litigants to hold companies accountable for alleged securities fraud.
The Nvidia matter relates to whether the plaintiffs cleared the heightened legal bar for bringing private securities fraud suits under a 1995 federal law, the Private Securities Litigation Reform Act to screen out frivolous litigations.
Meanwhile, some judges expressed reservations about intervening in the case’s technical complexities on whether there was a clear legal issue to decide, as opposed to facts.
Justice Elena Kagan told lawyer Neal Katyal, representing Nvidia, "It seems you're asking us to engage in an analysis that we are not very good at, and weren't expecting when we took this case.”
Justice Ketanji Brown Jackson questioned whether the standard, which Nvidia asked the court to adopt would burden the plaintiffs.
Noting that critical evidence often is not obtained by plaintiffs until a later stage of litigation, he added, "My concern is that you appear to require the plaintiffs to have the evidence to plead their case.”
The plaintiffs had accused Nvidia and its CEO Jensen Huang of violating the Securities Exchange Act of 1934 by making statements in 2017 and 2018. The firm was accused of downplaying that its revenue came from crypto-related purchases.