Tech firm Nvidia and boss face lawsuit alleging investors misled in spy affair
The complaint comes after US President Donald Trump said the FBI is investigating the affair, which Jensen Huang has acknowledged and apologised for.
A shareholder has sued Nvidia and its chief executive Jensen Huang, accusing them of deceiving investors in their responses to media reports about Mr Huang’s affair with a purported Chinese spy that threatens national security.
The complaint comes after US President Donald Trump said the FBI is investigating the affair, which Mr Huang has acknowledged and apologised for.
Mr Trump said on Monday that Mr Huang told him he had no idea the person could be involved in espionage.
The affair, which is also being scrutinised by the board of the technology company, has raised concerns that Beijing is using nefarious means to gain access to Nvidia’s cutting-edge microchips which power the development of artificial intelligence but face export restrictions to China.
The complaint filed on Monday in a California court says the company misled investors about Mr Huang’s relationship with Alice Huang, who news reports said is suspected of working for Chinese intelligence, and the national security implications.
It accuses Nvidia and Mr Huang of failing to disclose the affair and issuing false statements about Nvidia’s relationship with Alice Huang’s company, which posed a “material risk” to Nvidia’s reputation and business prospects.
Nvidia did not immediately respond to a request for comment.
The complaint, filed by retail investor Mark Kistenmacher, seeks unspecified damages and a jury trial.
It seeks to represent in a class-action lawsuit anyone who bought shares of Nvidia from October 9, when news of the affair was first reported by the New York Times, until November 8, when the company said it was investigating reports that Mr Huang was the “target of a foreign intelligence effort”.
Shares of Nvidia, one of the world’s most valuable companies, fell 7.97 dollars (£5.94), or 4.3%, on Monday, wiping out about 190 billion dollars (£141.5 billion) in market value.
Shares were down again on Tuesday before the opening bell.
“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiff and other class members have suffered significant losses and damages,” the complaint said.
Had investors known the truth, they would not have purchased Nvidia’s shares “at the artificially inflated prices that they did, or at all”, the complaint said.
The New York Times reported that US intelligence determined that Alice Huang, a former executive of a Singapore-based Megaspeed International, was gathering information for Beijing.
Megaspeed bought more than 4.8 billion dollars (£3.5 billion) worth of Nvidia chips over the past two years, according to the Times.
Huang is a common Chinese surname and the two are not related.