Highlights
- The Supreme Court of the United States has dismissed an appeal by Nvidia Corporation in relation to a securities fraud lawsuit under section 10(b) of the Securities Exchange Act of 1934.
- The United States Court of Appeals for the Ninth Circuit found that Nvidia’s Chief Executive Officer and Chief Finance Officer made materially false or misleading statements regarding the company’s dependence on the cryptocurrency market.
- The lawsuit, filed by investment management firm E. Ohman J:or Founder AB, raised significant questions about the Private Securities Litigation Reform Act’s pleading requirements, particularly regarding the necessity of detailing internal company documents.
The Supreme Court of the United States has dismissed an appeal by the chipmaker Nvidia seeking to avoid a security fraud lawsuit under section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as for control-person liability filed by the shareholders accusing the chipmaker of misleading investors on the dependence of sales on the cryptocurrency market.
The United States Court of Appeals for the Ninth Circuit’s order found that the Chief Executive Officer and Chief Finance Officer made materially false or misleading statements.
The appellate court allowed the submissions regarding the scienter against the CEO, however, denied the same against the CFO of the Nvidia Corporation.
The matter in question dealt with the Private Securities Litigation Reform Act (PSLRA) which imposes exacting pleading requirements on plaintiffs who file securities fraud class actions.
This petition presented two questions that have divided the circuits about how the PSLRA’s requirements apply in this common and recurring context: 1. Whether plaintiffs seeking to allege scienter under the PSLRA based on allegations about internal company documents must plead with particularity the contents of those documents. 2. Whether plaintiffs can satisfy the PSLRA’s falsity requirement by relying on an expert opinion to substitute for particularized allegations of fact.
The lawsuit was filed by investment management firm E. Ohman J:or Founder AB.
The court heard the arguments on November 13.
