A California District Court Judge has ruled in favor of NVIDIA GPU manufacturer, closing a three-year-old case that accused the company of misrepresenting $1 billion in crypto mining revenue. The lawsuit was brought on behalf of investors who acquired the common stock of NVIDIA Corporation between May 10, 2017, and November 14, 2018.
The initial consolidated class-action complaint included that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The primary plaintiff is Ironworkers Local 580 Joint Fund, an employee benefit plan that had bought shares in NVIDIA.
The plaintiffs cited reports from the Prysm Group and RBC Capital Markets that claimed NVIDIA understated $1.13 billion to $1.35 billion in the sale of crypto mining hardware.
However, Judge Haywood S. Gilliam, Jr. of the Northern District of California issued an order granting NVIDIA Corporation’s motion to dismiss while denying its motion to strike in the consolidated securities class action.
The judge also rejected other arguments from the plaintiff regarding securities law violations. He even dismissed the case without leave to amend:
NVIDIA saw tremendous growth in the second half of 2017 and the first half of 2018. However, its stock price fell nearly 30% following the company’s announcement of an anticipated decline in profits by the end of 2018.
This prompted accusations that NVIDIA failed to inform its investors that its portion of earnings was from the sales of mining-related GPUs.
On the basis of the plaintiff’s witnesses, NVIDIA even failed to disclose that a significant amount of its 2017 and 2018 revenue came from the sales of cryptocurrency miners.
The share prices of NVIDIA declined shortly after the Q4 earnings report numbers were posted this week. Despite this, NVIDIA had a good fourth-quarter performance. Its sales were up 61% year over year, driving a 64% increase in per-share earnings. Nevertheless, its share prices did fell down to 6% since the fourth-quarter figures got released this week.