Dewy, Cheatum, And Howe
Suit accuses Nvidia of inflating stock price with accounting practice
BALA CYNWYD, Pa -- A class action lawsuit has been filed against graphics chip supplier Nvidia Corp. by a law firm here, which accuses the Silicon Valley company of violating accounting rules to overstate its revenues and assets.
The suit is connected to Nvidia's announced internal review of a certain accounting practice related to the recording of reserves and the timing of expenses in the company's fiscal 2000 and 2001 years. The Santa Clara, Calif., company said it had received a query about these items from the Securities and Exchange Commission and was cooperating with the SEC (see Feb. 14 story).
News of the SEC query and review caused Nvidia's stock to dip last month as investors worried about accounting problems after energy giant Enron Corp. collapsed while hiding millions of dollars in losses.
The law office of Marc S. Henzel said it filed the class action suit in the Northern District of California, alleging that Nvidia and its directors has attempted to boost the price of the company's stock until defendants were able to sell "at least $66 million worth of their own Nvidia stock."
A response from Nvidia was not immediately available.