New Delhi: Nvidia chief executive Jensen Huang and the company are facing a class-action lawsuit over allegations that they misled shareholders by withholding information about a controversy involving a woman suspected of having links to Chinese intelligence. The investors claim the company failed to disclose potential national security risks that could affect its business and share value.
The lawsuit was filed by Rosen Law Firm in a federal court in San Jose, California. It accuses Huang and Nvidia of making misleading statements and failing to share important information with investors. The complaint claims these actions artificially inflated the company’s share price and caused losses when the controversy emerged.
The case centres on Alice Huang, a Chinese executive formerly associated with Singapore-based data-centre company Megaspeed.
Megaspeed has also come under scrutiny over its purchase of Nvidia’s advanced AI chips. Two US law enforcement sources told CBS News that the US justice department’s national security division is investigating the company over possible violations of US export restrictions. Authorities are examining concerns that chips may have been diverted to China.
Nvidia’s board opened an inquiry after reports emerged that Huang may have been targeted by a foreign intelligence operation. The company has also launched an independent investigation into the matter. Beijing has denied the allegations involving Chinese intelligence.
The United States president, Donald Trump, said on Monday that the FBI was investigating the controversy. He also said Huang had told him that he was unaware of the woman’s alleged intelligence links.
Huang separately admitted to being unfaithful to his wife in a message released to Nvidia employees on Sunday. He apologized to his wife and children, saying his actions had hurt them.
The controversy has also affected Nvidia’s market performance. Its shares fell 4.3 per cent on Monday, wiping around $190 billion off its market value. Nvidia is one of the world’s most valuable companies and a leading supplier of chips used to develop and run artificial intelligence models.
The shareholder lawsuit seeks unspecified damages from Nvidia and Huang. Neither Nvidia nor Megaspeed had immediately responded to the legal action.