A fraud lawsuit filed by shareholders, an internal investigation, and 190 billion dollars in market capitalization wiped out on the stock market. The case involving Jensen Huang, CEO of Nvidia, worsens after revelations about his extramarital affair with Alice Huang, a tech sector manager suspected of collaborating with Chinese intelligence. According to Reuters, on Monday, November 9, shareholders filed a class action lawsuit against the American semiconductor giant and its CEO, accusing them of withholding relevant information from investors about potential national security risks and the possible economic and reputational consequences of the relationship.
The lawsuit was filed in the federal court of San Jose, California, just five minutes after the close of trading on Wall Street, at the end of a session in which Nvidia lost about 190 billion dollars in market value. Shareholders claim that the company and Huang misled them by not communicating concerns related to the relationship between the executive and the woman, who was already CEO of Megaspeed, a company suspected by US investigators of being used as a cover to transfer advanced American semiconductors to China.
Link to The shareholders' lawsuit and the accusations against NvidiaThe shareholders' lawsuit and the accusations against Nvidia
At the center of the legal action is the alleged failure to communicate to investors information that could have impacted the company's valuation. According to the lawsuit, Nvidia and its CEO allegedly concealed both the potential national security risks arising from the relationship with Alice Huang and the consequences that any involvement of the woman in espionage activities could have on the group's reputation and business prospects. Shareholders are seeking financial compensation, the amount of which has not yet been specified. The allegations in the lawsuit are, at this point, accusations made by investors and not liabilities established by a court.
The matter is particularly significant for the sector in which Nvidia operates, being among the world's leading producers of chips for artificial intelligence and advanced computing. The technologies developed by the company are at the heart of the trade restrictions imposed by the United States on China, especially regarding the export of next-generation semiconductors. According to suspicions by American investigators reported by the press, Megaspeed could have played a role in transferring these technologies to Beijing. However, it has not been confirmed that Alice Huang actually worked for Chinese intelligence, nor that the CEO of Nvidia was aware of any illicit activities.
Link to Huang's apology and the stock crash on Wall StreetHuang's apology and the stock crash on Wall Street
After news of the relationship spread, Jensen Huang sent a communication to Nvidia employees in which he apologized and took full responsibility for the matter. Simultaneously, the company's board of directors launched an internal investigation to delve into the circumstances of the case and its possible implications for the company. The news also had repercussions on financial markets: on Monday, Nvidia's stock experienced a sharp decline, with an estimated market capitalization loss of about 190 billion dollars, while the group's overall value stood at around 4.3 trillion.
In addition to the manager's personal controversy, issues of corporate governance and transparency towards investors arise. The class action aims to determine whether Nvidia and its CEO were obliged to disclose information related to the relationship and any associated risks, considering the strategic importance of the company for the US tech industry. The outcome of the proceedings will also depend on the ability to prove that the alleged omissions have concretely harmed shareholders.
Link to Trump defends Huang, while the FBI takes interest in the caseTrump defends Huang, while the FBI takes interest in the case
The President of the United States, Donald Trump, also weighed in on the matter, stating during a press meeting on Monday that he was "astonished" by the accusations against Nvidia's CEO. Trump reported having personally spoken with Huang, who assured him he did not know Alice Huang was a suspected agent for China. The president then defended the executive, with whom he maintains close relations and to whom he had awarded a significant honor for achievements in science and technology.
During the same intervention, Trump also revealed that the FBI had begun to take an interest in the matter. According to the New York Times, which had previously reported on the extramarital affair, the president was already informed about the relationship between Huang and the woman and the suspicions regarding her collaboration with Beijing but chose not to intervene. This journalistic account adds to the president's public statements and does not, in itself, confirm the espionage accusations.
Link to China's denial and the American president's financial interestsChina's denial and the American president's financial interests
The Chinese government has denied the accusations regarding Alice Huang's alleged involvement in intelligence activities. A spokesperson for the Chinese Foreign Ministry called the account of the alleged Chinese spy "an unfounded accusation, a slander, and a defamation," thus denying the version circulated in the US press.
Meanwhile, attention is also focused on the economic ties between Trump and Nvidia. The American president had declared in recent weeks that he sold over a million shares of the company during the summer and subsequently bought almost double that amount. The financial operations reported by the president add an element of interest to the matter, given his institutional position and Nvidia's role in US technological and commercial policies.
(Associated Medias) - All rights reserved