The Zhitong Finance APP learned that the USA Supreme Court rejected the appeal of the AI Chip giant on Wednesday.$NVIDIA (NVDA.US)$The chip company attempted to avoid a securities fraud lawsuit filed by shareholders, who accused the company of misleading investors by incorrectly stating how much its sales depended on the volatile Cryptos market.

It is understood that the judges of the USA Supreme Court heard arguments regarding the case on November 13 and chose not to make a formal decision on the potential legal disputes, but instead dismissed NVIDIA's appeal against the lower court's ruling allowing the 2018 class action lawsuit to proceed. This lawsuit is led by the investment management company E. Ohman J: or Fonder AB based in Stockholm, Sweden.

The USA Supreme Court, in deciding not to approve the appeal, still upheld the lower court's ruling. The Supreme Court's dismissal was a one-way directive and provided no explanation.

In the arguments, some judges expressed reservations about intervening in the case. They wondered whether there were clear legal issues for them to decide, rather than just disputes over certain facts, and stated that given the technical complexity of the case, they were not suited to ultimately resolve it.

The focus of the debate was whether the plaintiffs cleared the higher legal threshold required for filing a private securities fraud lawsuit as established by the Private Securities Litigation Reform Act of 1995, which aims to filter out trivial lawsuits.

The plaintiffs accused NVIDIA and its CEO Jensen Huang of making false projections and statements in 2017 and 2018, falsely describing how much of NVIDIA's revenue growth was due to the scale of Cryptocurrency-related Hardware purchases, in violation of federal law under the Securities Exchange Act of 1934.

Since 2017, as the prices of certain Cryptos began to rise, NVIDIA's high-performance GPUs have increasingly gained popularity among Global Cryptocurrency Institutions for "crypto mining," a process that involves executing many extremely complex mathematical encryption algorithms to secure Cryptos such as Bitcoin and Ethereum.

By the end of 2018, against the backdrop of significant declines in profitability related to Cryptos, NVIDIA's revenue began to fall below expectations, leading to a sharp drop in its stock price starting from early November of that year.

The lawsuit seeks unspecified monetary damages, partly to compensate for the long-term value loss of the NVIDIA Stocks held by investors at the time.

It is reported that NVIDIA agreed to pay $5.5 million to USA authorities in 2022 to resolve allegations that it did not properly disclose the impacts of its crypto mining business and related GPU demand on its gaming business, without admitting or denying the findings of the USA federal regulators' investigation.

A federal judge previously dismissed the Shareholder lawsuit, but the USA Ninth Circuit Court of Appeals based in San Francisco subsequently reinstated the case. The Ninth Circuit found that the plaintiffs sufficiently alleged that NVIDIA CEO Jensen Huang and the entire NVIDIA management made "false or misleading statements, and acted knowingly or recklessly," allowing their case to proceed.

Deepak Gupta, representing the Shareholder group at the USA Supreme Court, stated that the dismissal of the lawsuit was "a victory for corporate accountability."

Gupta remarked, "With the support of the USA Chamber of Commerce and its ally partners, the pro-business Supreme Court Bar frequently attempts to resolve legal issues that seem non-existent and to manipulate rules to create fictitious legal problems in order to diminish class actions. We hope the court will think twice next time a company uses the same script."

A spokesperson for NVIDIA stated that the company "is well-prepared and continues to defend itself."

A spokesperson for the company stated in a statement: "Consistent and predictable standards in securities litigation are crucial for protecting Shareholders and ensuring a strong economy, and we remain committed to supporting them."

NVIDIA has argued before the Supreme Court that the plaintiffs failed to adequately prove that the disputed company statements were false or that the company deliberately or recklessly misled investors, as required by USA federal law.

The plaintiffs countered that their lawsuit contains sufficiently strong allegations—collecting actual evidence from former NVIDIA employees, market analysis, and expert opinions, ultimately surviving NVIDIA's motion to dismiss and proceeding into the discovery phase of the litigation.

It is understood that the current USA government led by President Joe Biden supports Shareholders in this case.

This long-standing dispute involving NVIDIA is one of two cases reviewed by the Supreme Court in November, which pertains to the rights of private litigants to hold publicly traded companies accountable for alleged securities fraud. The other case involving Meta (Meta.US) related to Facebook was argued on November 6 and was similarly dismissed by the judge on November 22.

Editor/ping