Nvidia’s board has commissioned an internal investigation into the company’s ties to Megaspeed after CEO Jensen Huang acknowledged an extramarital relationship with Alice Huang, a Megaspeed executive.
US security agencies suspect her of spying for China, while Nvidia says it has no evidence of leaked technology secrets or a national security breach.
The case also includes an investor lawsuit alleging misleading disclosures.
Internal investigation at Nvidia
Nvidia's board has hired law firm Wachtell, Lipton, Rosen & Katz to conduct an internal investigation into the incident. The company has officially stated that at this time there is no indication that technological secrets were leaked or that US national security was violated.
Jensen Huang reportedly hired a public relations consultant specializing in scandal management a year before the affair came to light. It is not clear whether this choice was related to his personal life or whether he already knew about the suspicions regarding Alice Huang.
The consequences for the company and investors
The news sparked an immediate backlash in the markets, with Nvidia's stock falling more than 9% in two days. In addition, a group of investors filed a lawsuit against the company. The investors claim that they were misled about the nature of Nvidia's transactions with Megaspeed.
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The matter has also raised questions about Nvidia's internal structure. Jensen Huang owns about 3,6% of the shares and does not have full voting control, while his children hold executive positions at the company. The structure and family ties in senior positions have raised concerns among analysts as the company faces its biggest management challenge in years.
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