Nvidia and its chief executive, Jensen Huang, were sued on Monday in a proposed class action lawsuit accusing them of defrauding shareholders by concealing Huang’s alleged ties to a suspected Chinese spy.
According to a complaint filed in federal court in San Jose, California, the defendants misled shareholders about Huang’s alleged affair with Alice Huang, a former executive of Singapore-based Megaspeed who is not related to him.
The lawsuit also alleges that Nvidia failed to disclose that the matter had raised national security concerns, potentially threatening the company’s reputation and business prospects.
Allegations raise national security concerns
The New York Times reported last month on the alleged relationship and said US authorities had concluded that Alice Huang was a Chinese intelligence asset.
Nvidia did not immediately respond to a request for comment.
Jensen Huang told Nvidia employees that he had been unfaithful to his wife but did not disclose details of the alleged relationship.
Huang co-founded Nvidia and has led the Santa Clara, California-based company as it became the world’s most valuable chipmaker, making him one of the most prominent figures in the global artificial intelligence boom.
Nvidia launches probe as shares fall
Nvidia announced on Sunday that it was investigating the matter.
Its shares closed 4.3% lower on Monday, wiping approximately US$190 billion off the company’s market capitalisation.
The lawsuit was filed five minutes after the US stock market closed.
Shareholders commonly file lawsuits against companies following unexpected declines in their share prices.
The Nvidia shareholders, led by Mark Kistenmacher, are seeking unspecified damages from the defendants.
