Graphics giant NVIDIA has been hit by lawsuit which claims that the company breached US securities laws by concealing for at least eight months the fact that its GPUs were affected by a serious thermal defect.
The lawsuit, brought against NVIDIA by New York law firm Shalov, Stone, Bonner & Rocco, claims that CEO Jen-Hsun Huang and CFO Marvin Burkett knew about the existence of the GPU problem as early as November 2007 but that no public announcement was made July 2 2008. Following this announcement NVIDIA's stock price tumbled by over 30%.
The lawsuit is seeking class action status against NVIDIA and unspecified damages.
What seems to be a cornerstone of the case is the fact that HP has issued BIOS updates in an attempt to minimize the effect of the flaw eight months before NVIDIA made an announcement to investors.
From the lawsuit:
According to multiple public sources, the earliest of the BIOS updates was issued by Hewlett-Packard no later than November 2007. Although NVIDIA and the other Defendants were almost certainly aware of the underlying problem earlier than this, the fact that they had knowledge of the flaws by November 2007 is beyond serious debate. Nevertheless, for at least eight months, Defendants concealed from NVIDIA investors these defects and their obvious impact on the Company's financial condition and future business prospects.
If you skip to paragraph 25 of the lawsuit you will see this post I wrote back at the end of July being quoted extensively.
For more information visit http://www.nvdaclassaction.com/.