Nvidia shareholder sues over CEO’s undisclosed affair with purported spy

The shareholder accuses the company and CEO Jensen Huang of giving out false and misleading information in the wake of media reports of the romantic relationship.(CN) — A Nvidia shareholder sued the company on Monday over its response to media reports that CEO Jensen Huang was involved with a suspected spy who may have helped China evade U.S. export controls on the company’s high-end artificial intelligence chips.The complaint, filed in federal court in San Jose, California, comes after Huang on Sunday acknowledged he had a relationship with the woman, Alice Huang, and Nvidia’s board opened an investigation into the chief executive’s affair.Nvidia’s stock dropped 5% on Monday, wiping out $192 billion in market value.The shareholder, Mark Kistenmacher, seeks to represent other Nvidia investors who purchased the company’s stock between Oct. 9 and Nov. 8, in a securities class action.Media reports first emerged Oct. 9 about Huang socializing with the woman, who reportedly is a former executive at a Singapore-based data center company, at an event in Taipei last June.The U.S. Commerce Department is also reportedly investigating the Singapore company, called Megaspeed International, for possibly helping China circumvent restrictions on purchasing Nvidia’s AI chips.In response, Nvidia said at the time its compliance team had looked into Megaspeed, which was looking to buy about $2 billion of the company’s AI technology, and determined the company wasn’t diverting its purchases to China.That, according to the shareholder’s complaint, “was materially false and misleading at the time it was made because Jensen Huang had an affair with Alice Huang, a Megaspeed executive and suspected Chinese spy, who is suspected of seeking to help smuggle Nvidia products into China.”By Oct. 29, U.S. officials had also reportedly determined Alice Huang was working for Beijing and helping China evade constraints on its ability to gain access to advanced AI chips.The article also raised to possibility the woman was trying to gain information from Huang regarding the Trump administration’s thinking with respect to China.Again, in response to newspaper’s reporting, Nvidia insisted there was nothing unusual or unexpected about the CEO’s interaction with Alice Huang.And Huang told Bloomberg News that Nvidia’s dealing with Megaspeed International were “normal and not unusual” and that Nvidia’s relationship with Megaspeed’s officials was proper.Representatives of Nvidia didn’t respond to a request for comment on the shareholder lawsuit after regular business hours.The lawsuit accuses Nvidia and Huang of violating the primary anti-fraud provision of the Securities Exchange Act and its Rule 10b-5, and it accuses Huang of violating Section 20(a) of the act, which can hold individuals liable for act violations alongside the primary violator.The shareholder is represented by Laurence Rosen of The Rosen Law Firm PA in Los Angeles.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads