Nvidia's Own Shareholders Sue for Coverup
Nvidia has been slapped with a lawsuit alleging the company violated U.S. Securities laws and accusing it of keeping those major chip flaws the company announced over the summer a secret, despite knowing about them and their "root causes" since almost this time last year.
It was a pretty bad summer for Nvidia. Announcing a major hardware flaw means bad publicity for anyone. Aside from all the bad press, the lawsuit claims that when the company announced details of the flaw back at the beginning of July, Nvidia shares dropped by over 30 percent. Pile on the fact that the company said it would be incurring $200 million in warranty costs and that’s a pretty bad year.
It looks like the company is about to have an equally bad autumn thanks to the same problem. A lawsuit filed in California yesterday by New York law firm Shalov, Stone, Bonner & Rocco claims Nvidia knew about the problem with defective chips and knew of any ramifications such problems might have for the financial future of the company as early as November 2007.
The lawsuit claims that Nvidia purposely hid the information from the public with a series of statements made by the company throughout the last year and goes on to cite a series of statements from Nvidia touting its financial success for Q3 and Q4 of fiscal year 2008. The suit is seeking class action status and unspecified damages.
A similar lawsuit, but with class action status, was also announced today from the law firm of Girard Gibbs LLP. The suit is filed on behalf of all persons and entities who acquired the common stock of Nvidia Corp. between November 8, 2007, and July 2, 2008 and cites similar complaints.
Specifically, the suit takes issue with Nvidia’s "belatedly revealed" GPU defect information on July 2, 2008, which the company allegedly knew about, causing the its market capitalization to drop by over $3 billion and hurting shareholders. Those who acquired Nvidia common stock during the class period may before November 10, 2008 request to be appointed as lead plaintiff.