Law firm files class-action lawsuit against Nvidia after CEO Jensen Huang confirms affair with alleged Chinese spy

The baying of the hounds can be heard at a distance. Yesterday, Nvidia's Jensen Huang confirmed that it was indeed true that he had a romantic affair with Alice Huang (not related to the family), who U.S. intelligence services claim is a Chinese honeypot tasked with facilitating smuggling of the firm's advanced GPUs into China. Now, a class-action lawsuit and investigations have started flying from almost everywhere.

This development is not unexpected, as basic securities law allows shareholders to sue their investees if they misrepresent facts or otherwise perform actions that cause a drop in stock prices. They may have a point, as Nvidia's shares dipped significantly when the confirmation of Jensen's infidelity and the ramifications thereof hit the press everywhere.

The legal proceedings are bound to be numerous, but as of right now, the first class-action lawsuit was filed by the Rosen Law Firm. The suit claims that Nvidia and Jensen Huang failed to disclose or misled investors regarding Jensen's affair with Alice, lied about it when asked, raised national security concerns, and caused a subsequent loss of Nvidia's reputation. You can check out the case docket at PacerMonitor here.

While legal analysis is beyond the scope of this news, Nvidia did downplay Jensen's relationship with Alice, saying that "Megaspeed has been no different than many other regional cloud customers. Meetings with customers are part of a CEO’s job; Jensen talks with thousands of customer executives every year."

Other legal firms have launched their own investigations into the recent development, with essentially the same justification: Schall, Brown & Schwartz attributes a 5.5% pre-market-trading drop to Nvidia, as does Levi & Korsinsky. The office of Frank R. Cruz mentions an 8.8% figure related to intra-day exchanging, and is interested in shareholders with $50,000 in losses. The percentage-drop figure is 5.88% premarket for Bronstein, Gewritz & Grossman.

Every investigation and suit mentioned here requires no upfront fees from complainants, as with most class-action lawsuits. The underlying condition is often that the law firms involved get a cut of whichever damages or settlements may appear at the end of the lawsuit. Some of them, like the one by Levi & Korsinsky, even aim to relieve investors who've already sold their Nvidia shares and sold them at a loss, with no minimum amount required.