Nvidia and chief executive Jensen Huang face a shareholder lawsuit over allegations they misled investors regarding Huang's affair with a former executive at Singapore-based Megaspeed, who US authorities have concluded was a Chinese intelligence asset. The Guardian reported that the lawsuit was filed in federal court in California and claims both Nvidia and Huang failed to disclose that the matter raised national security concerns threatening the company's reputation and business prospects. The case emerged as Donald Trump said the FBI was investigating Huang's links to the alleged Chinese spy.
According to the complaint, Nvidia's statement to the New York Times describing Huang's interaction with the woman as "not unusual or unexpected" was "materially false and misleading" because he had an affair with her. The company said at the time that "meetings with customers are part of a CEO's job; Jensen talks with thousands of customer executives every year". The lawsuit also accuses Nvidia of making false statements about its relationship with Megaspeed, which has been investigated over suspicions it may have diverted Nvidia chips to China in violation of US export restrictions.
Huang admitted on Sunday he had been "unfaithful" to his wife but did not identify the person involved. In an October 30 interview, he said of Megaspeed's GPU deployments: "we've studied all their deployments of our GPUs and counted every one. And I think the US government also has as well." Megaspeed said in a statement last year it had acted "fully in compliance with all applicable laws, including US export control regulations".
Nvidia announced on Sunday it was conducting an independent investigation into reports that Huang was targeted by a foreign intelligence effort. Shares fell 4.3% on Monday, reducing the company's market value by approximately $190bn, according to the latest figures. The lawsuit was filed five minutes after the US stock market closed. Shareholders led by retail investor Mark Kistenmacher are seeking unspecified damages in what is termed a class action suit. Several US law firms have announced investigations into whether Nvidia misled investors.
Trump said on Monday that while the FBI was investigating, he did not think Huang had reason to worry. "I did speak to him today just to see if he's feeling all right," Trump said. "He said he had absolutely no idea that the person in question was a spy." Huang posted an open letter on Nvidia's website stating: "I support the investigation and will cooperate fully. I love our country and our company. I am committed to protecting Nvidia and supporting America's national security."