Nvidia and Jensen Huang sued by shareholders over affair with alleged Chinese spy

A federal lawsuit filed in San Jose, California, accuses Nvidia and its chief executive, Jensen Huang, of defrauding shareholders by failing to disclose that his alleged affair with Alice Huang raised national security concerns. The complaint alleges both parties misled investors about the impact on the company's reputation and business prospects.

The legal action was filed just minutes after the U.S. stock market closed on Monday, a day after shares in the company tumbled 4.3%, reducing its market value by approximately $190bn. The lawsuit was filed by a group of shareholders, led by retail investor Mark Kistenmacher, who are seeking unspecified damages.

The New York Times reported last month that U.S. authorities had concluded Alice Huang was a Chinese intelligence asset. Nvidia announced on Sunday it was conducting an independent investigation into reports that Huang was the 'target of a foreign intelligence effort.' The company did not immediately respond to a request for comment.

Trump backs investigation

U.S. President Donald Trump said on Monday that the FBI is investigating Huang's affair but does not believe the executive has reason to worry. Trump stated he spoke with Huang earlier in the day to check on his well-being and that the CEO had 'absolutely no idea' the person in question was a spy.

Huang co-founded Nvidia in 1993 and has led the California company as it became the world's most valuable chipmaker and a central figure in the artificial intelligence boom. In an open letter posted on Nvidia's website, he said he supports the investigation and will cooperate fully, adding that he is committed to protecting Nvidia and America's national security.