NVIDIA to pay 5.5M fine
The company has agreed to pay the penalty after failing to disclose its crypto revenue in 2018.
The company has not provided enough information to its shareholders, SEC (U.S. Securities and Exchange Commission) confirmed today. NVIDIA will pay a 5.5M USD fine because the company did not disclose the impact of cryptocurrency on the company’s gaming sales.
During consecutive quarters in NVIDIA’s 2018 fiscal year, the company did not inform its shareholders how many of the gaming cards were sold to the crypto market. Due to its volatility of this market, this could have led investors into uncertainty and as a result bad investments.
“Nvidia’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market. “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”
— Kristina Littman, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit.
NVIDIA did not admit or deny SEC’s findings. The company decided to pay the penalty.
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SEC Charges NVIDIA Corporation with Inadequate Disclosures about Impact of Cryptomining
Washington D.C., May 6, 2022 — The Securities and Exchange Commission today announced settled charges against technology company NVIDIA Corporation for inadequate disclosures concerning the impact of cryptomining on the company’s gaming business.
The SEC’s order finds that, during consecutive quarters in NVIDIA’s fiscal year 2018, the company failed to disclose that cryptomining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming. Cryptomining is the process of obtaining crypto rewards in exchange for verifying crypto transactions on distributed ledgers. As demand for and interest in crypto rose in 2017, NVIDIA customers increasingly used its gaming GPUs for cryptomining.
In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by cryptomining. Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance. The SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining.
“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit. “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”
The SEC’s order finds that NVIDIA violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934. The order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures. Without admitting or denying the SEC’s findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty.
The SEC’s investigation was conducted by Brent Wilner of the Crypto Assets and Cyber Unit, and supervised by Diana Tani and Ms. Littman of the Crypto Assets and Cyber Unit.
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