"Significant Losses And Damages": Nvidia, Jensen Huang Sued By Investor

A day after the news of his affair with an alleged Chinese spy, an Nvidia shareholder has sued the AI leader and its CEO, Jensen Huang, accusing them of misleading investors in their responses to media reports about the scandal.

The tech titan faced fresh turmoil on Tuesday after US-based Rosen Law Firm said it had filed a class-action lawsuit against Huang and his AI behemoth. The lawsuit, filed on Monday at a California court, also claims that they failed to disclose information to shareholders about his links to the woman who allegedly passed on critical information to Beijing.

Last month, The New York Times reported that Huang had been in an intimate relationship with Alice Huang, a Chinese executive of Singapore-based data centre company Megaspeed. It was also reported that the US Commerce Department was investigating Megaspeed on suspicions that the company was helping dodge US restrictions that block Nvidia chips from being sold to China.

READ | "There'll Never Be One Like Me": Jensen Huang's Nvidia Faces A Succession Crisis

At that time, Nvidia had said its compliance team checked and determined that the Singapore-based company was not doing anything illegal.

On Sunday, Huang admitted that he was, in fact, in a close relationship with Alice Huang. Nvidia also launched a probe to determine the espionage accusations.

What Does The Lawsuit Say?

The lawsuit now alleges that Huang and Nvidia gave false statements about the AI giant's links to Megaspeed, which posed a "material risk" to Nvidia's reputation and business prospects.

The complaint, filed by retail investor Mark Kistenmacher, seeks unspecified damages and a jury trial.

It further seeks to represent in a class action lawsuit anyone who bought shares of Nvidia from October 9, when the affair was first reported, to November 9, when Nvidia said it was launching its independent investigation.

READ | How Nvidia's Dependence On Jensen Huang Could Become Big Risk For Investors

It also says that Nvidia's false statements "artificially inflated" the company's shares.

"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 lawsuit alleges.

It says that if investors knew about Huang's actions and Nvidia's relations with Megaspeed, they would not have bought the shares "at the artificially inflated prices that they did, or at all."

Huang admitted to his affair in a message to Nvidia employees on Sunday, saying he had been "unfaithful" to his wife.

"My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry," he said.

Nvidia co-founder Huang, 63, has no obvious successor and has close ties to Trump. He owns 3.6 per cent of its stock and has dozens of direct reports, suggesting a tight grip on the company.

Nvidia's shares fell by around 8 per cent during early trading on Monday, but pared some losses to close 4.3 per cent lower and wiping off $190 billion in market value. Its shares fell a further 6 per cent at the Wall Street open on Tuesday.