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.
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Jane McEntegart is a writer, editor, and marketing communications professional with 17 years of experience in the technology industry. She has written about a wide range of technology topics, including smartphones, tablets, and game consoles. Her articles have been published in Tom's Guide, Tom's Hardware, MobileSyrup, and Edge Up.
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r1Master Pretty soon no one is going to want to make anything, supply anything, help anyone, building anything... too many lawsuits... its a sad sad world we live in...Reply -
kelfen LOL USA indeed. Hava a promblem sue and make alot of money that will tear apart the world by greedReply -
Fliujniligui Hey Hey, Nvidia is a nice company to own on the long term. They are leaders and will remain with some healthy competition. Well shareowners should just profit from this temporary weakness in the stock price to load up on the shares, averaging down their cost per share and awaiting for business to go back as usual.Reply -
Fliujniligui Hey Hey, Nvidia is a nice company to own on the long term. They are leaders and will remain with some healthy competition. Well shareowners should just profit from this temporary weakness in the stock price to load up on the shares, averaging down their cost per share and awaiting for business to go back as usual.Reply -
caamsa USA? Sad country we live in?....well go try living some where else then. I love my country USA!Reply
Go read a history book. We didn't start the fire.
I do feel sorry for Nvidia. -
bradgv Okay, so the owners (stockholders) of the company are suing their company...this doesn't make a whole lot of sense. Any settlement that they get is just going to be paid by the company, out of their profits. Which reduces the equity in the company making the stock worth less...So if they wanted to save a whole lot of lawyer fees, they could just take $50 out of the bank, hand it back to themselves and be done with it...this has got to be some stupid lawyers idea so that they can collect the fees.Reply -
englandr753 Companies should also take part in their responsibility and look out after their shareholders. If you try to beat the system sometimes it beats you and that is what is happening to Nvidia now.Reply
I like Nvidia and am a satisfied customer but a company big or small should do the right thing...ALWAYS! -
fulle Everyone seems to be feeling sorry for Nvidia.... who knew all along that they shipped defective parts, and lied to cover up their mess. Nvidia's been involved in some extremely unethical business practices here. They need to be held accountable.Reply