A shareholder has sued Nvidia and its CEO, Jensen Huang, accusing them of deceiving investors in their responses to media reports about Huang's affair with a purported Chinese spy that threatens national security.
The complaint comes after President Donald Trump said the FBI is investigating the affair, which Huang has acknowledged to and apologized for. Trump said Monday that Huang told him he had no idea the person could be involved in espionage.
The affair, which is also being scrutinized by Nvidia's board, 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 Monday in a California court says the company misled investors about 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 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 didn't 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 Huang was the “target of a foreign intelligence effort."
Shares of Nvidia, one of the world's most valuable companies, fell $7.97, or 4.3%, on Monday, wiping out about $190 billion in market value. Shares were down again 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 wouldn’t 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 U.S. 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 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.
