Proactive Investors - NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) is facing a review by the US Supreme Court in a case that could set a precedent for shareholders filing securities fraud lawsuits.
The company is seeking to dismiss a lawsuit alleging it misled investors about its dependence on revenue from cryptocurrency mining before the market downturn in 2018.
Justices will evaluate NVIDIA's contention that the lawsuit lacks the necessary specificity to advance further in court.
The lawsuit against NVIDIA alleges that its CEO, Jensen Huang, concealed the extent to which cryptocurrency-related sales were driving revenue growth, rather than sales for gaming, during 2017 and 2018. Nvidia contends that the shareholders lack sufficient internal company documents to substantiate their claims of misleading statements.
In 2020, NVIDIA agreed to a $5.5 million settlement with the Securities and Exchange Commission over related allegations.
If the judge favors NVIDIA in the court case, that could empower companies to dismiss shareholder suits early more easily on, potentially sparing them the costs of extensive legal defenses.
This follows a similar move earlier this month when the Court signaled its intention to potentially dismiss a shareholder suit against Meta (NASDAQ:META) Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) related to the Cambridge Analytica data scandal.
Shares of NVIDIA appeared unaffected by the review, trading 0.3% higher at US$132.28 following last week's stock split.