By Our Correspondent
Nvidia and its Chief Executive Officer, Jensen Huang, have been sued by shareholders over allegations that the company misled investors concerning a reported relationship between the technology billionaire and an alleged Chinese intelligence operative.
The lawsuit, filed at a federal court in San Jose, California, accuses Nvidia and Huang of failing to disclose information about the alleged relationship and its potential implications for national security, the company’s reputation and business prospects.
The legal action followed reports that Alice Huang, a former executive of Singapore-based Megaspeed, who is not related to the Nvidia chief executive, was allegedly linked to Chinese intelligence activities.
The New York Times had reported the alleged relationship last month, claiming that US authorities had concluded that Alice Huang was an asset of Chinese intelligence.
According to the shareholders, Nvidia and its chief executive failed to adequately inform investors about the potential risks associated with the allegations.
Nvidia did not immediately respond to a request for comment from Reuters.
Huang reportedly told employees that he had been unfaithful to his wife but did not provide details about the alleged relationship.
He co-founded Nvidia in 1993 and has since transformed the California-based company into the world’s most valuable chipmaker, making him one of the most prominent figures in the global artificial intelligence industry.
Meanwhile, Nvidia announced on Sunday that it had launched an independent investigation into reports that Huang was the target of a foreign intelligence operation.
The controversy triggered a decline in the company’s share price on Monday, with its stock falling by 4.3 per cent at the close of trading.
The decline reportedly wiped approximately $190 billion off Nvidia’s market value.
The shareholders’ lawsuit was filed five minutes after the US stock market closed.
The action, led by retail investor Mark Kistenmacher, seeks unspecified damages from Nvidia and Huang over the alleged failure to disclose information that could have affected investment decisions.
US President Donald Trump also confirmed on Monday that the Federal Bureau of Investigation (FBI) was looking into the matter, although he expressed confidence that Huang had little reason to be concerned.
Speaking during a White House briefing, Trump said he had spoken with the Nvidia chief executive earlier in the day to enquire about his wellbeing.
Trump added that Huang had told him he had no knowledge that the woman involved was allegedly connected to Chinese intelligence.
In an open letter published on Nvidia’s website, Huang expressed support for the investigation and pledged full cooperation with US authorities.
“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,” he said.
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