U.S. Supreme Court rules against Meta Platforms Inc.’s Facebook (NASDAQ:) Nvidia Corp .(NASDAQ:) is considering its motion to dismiss its federal securities fraud lawsuit. These cases could set new barriers for private plaintiffs seeking to prosecute companies for violating federal regulations.
Facebook is facing a class action lawsuit led by Amalgamated Bank (NASDAQ:AMAL). The lawsuit claims the social media company misled investors by failing to disclose the 2015 Cambridge Analytica data breach, which affected more than 30 million users. This breach was not mentioned in Facebook’s subsequent business risk disclosures, and the company portrayed the risks of such an event as hypothetical.
The lawsuit was filed in 2018 after Facebook’s stock price fell following media reports about Cambridge Analytica’s misuse of Facebook user data during the 2016 presidential campaign. The plaintiffs are seeking unspecified damages to recover lost value in Facebook stock.
In response, Facebook argued with the Supreme Court that it had no obligation to disclose risks that had already occurred, suggesting that a reasonable investor would view the risk disclosures as forward-looking. The company previously paid a $100 million settlement with the SEC over the matter and paid an additional $5 billion in fines to the Federal Trade Commission.
Nvidia is also seeking to dismiss a class action lawsuit that claims it misled investors about its revenue related to the cryptocurrency sector. The lawsuit, led by E. Ohman J:or Fonder AB, claims that Nvidia downplayed the extent of its revenue growth from cryptocurrency-related purchases in 2017 and 2018, leading investors and analysts to question the impact of cryptocurrency mining on Nvidia’s business. They claim to be confused about the impact.
Nvidia argues that the plaintiffs failed to meet the legal requirements for securities fraud claims set forth in the Private Securities Litigation Reform Act of 1995. In 2022, Nvidia paid a $5.5 million settlement with U.S. authorities for failing to sufficiently disclose the impact of cryptocurrency mining on its gaming business.
The Supreme Court, with its 6-3 conservative majority, has shown a pro-business trend in recent decisions limiting the power of federal regulators. These trends suggest that the Supreme Court may be favorable to the arguments presented by Facebook and Nvidia. The Supreme Court is scheduled to hear arguments in the Facebook case on Wednesday and the Nvidia case on November 13.
The role of private litigation in securities fraud has been emphasized as a key complement to public enforcement efforts, especially given the SEC’s limited resources. Private litigation allows lawyers to take action on behalf of injured investors.
But recent Supreme Court decisions, such as the June 27 ruling that found the SEC’s internal enforcement unconstitutional, have potentially weakened the agency’s ability to pursue these claims, which could increase its reliance on private litigation.
InvestingPro Insights
With Nvidia facing legal challenges, it is important to consider the company’s financial performance and market position. According to InvestingPro data, Nvidia boasts a significant market capitalization of $3.32 trillion, reflecting its dominant position in the semiconductor industry. The company’s revenue growth has been impressive, growing 194.69% over the past 12 months to $96.31 billion as of Q2 2025.
This impressive growth is further highlighted by two key InvestingPro tips: First, Nvidia has a perfect Piotroski Score of 9 across a variety of metrics, indicating strong financial health. Second, analysts expect sales growth to continue this year, suggesting the company’s momentum could continue despite the legal headwinds.
Nvidia’s financial strength is also evident in its profitability indicators. The company maintains an impressive gross margin of 75.98% and operating margin of 61.87%, demonstrating its ability to generate significant profits from its operations.
These financial metrics provide context to the ongoing legal proceedings and highlight Nvidia’s strong market position and financial performance even amid regulatory scrutiny. Investors considering Nvidia stock will find these insights useful in assessing the lawsuit’s potential impact on the company’s overall outlook.
For those who want a more comprehensive analysis InvestingPro offers 22 additional tips on Nvidia to give you a deeper understanding of the company’s financial health and market position.
Reuters contributed to this article.
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