'Did He Mislead His Board?': Former SEC Chair Questions Jensen Huang's Nvidia Disclosures, Warns NVDA Will Face ‘Some Tough Choices’

Former Securities and Exchange Commission Chair Gary Gensler questioned whether Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang misled investors about his reported relationship with a suspected Chinese intelligence operative, warning that the chipmaker’s board faces difficult decisions.

Gensler Questions Nvidia’s Shareholder Disclosure Obligations

"Did he mislead his board?" Gensler asked during CNBC’s Squawk Box on Monday. "Did he mislead the investing public?" He said directors must examine whether Huang fulfilled his disclosure obligations and whether Nvidia’s previous statements accurately informed shareholders.

"You start with materiality," Gensler said, referring to information significant to investors. "I think we’ve passed that threshold," he added, citing Nvidia’s approximately 5% premarket stock decline. His assessment did not directly establish any securities-law violation.

Gensler also emphasized Huang’s influence over the company he co-founded. "Is he material to the whole company? Absolutely," he said, noting reports that Huang oversees roughly 60 direct reports. Once investigators finish, directors "will have some tough choices," he warned.

Nvidia Launches Independent Probe Into Espionage Allegations

Nvidia announced on Sunday that independent directors and outside counsel would investigate reports of a foreign intelligence operation targeting Huang. The board said it had "no reason to believe" national security or company secrets were compromised.

Huang on Monday acknowledged marital infidelity following reports linking him to Alice Huang, a former executive at Nvidia customer Megaspeed suspected of Chinese intelligence connections. The allegations have also prompted congressional scrutiny.

Shareholder Lawsuit Adds Pressure On Nvidia

Reuters reported late Monday that shareholders filed a proposed class action accusing Nvidia and Huang of concealing material information about the relationship. The lawsuit seeks unspecified damages, but its allegations remain unproven.

The controversy has intensified investor concerns about Nvidia’s leadership. Reuters reported that shares closed down 4.3% Monday, wiping approximately $190 billion from the company’s market capitalization.

Despite the mounting scrutiny, Nvidia’s board reaffirmed confidence in Huang, who pledged to cooperate with the investigation.

Price Action: NVDA shares were trading 1.02% higher at $180.50 in after-market trading on Monday after the stock closed 4.27% lower in intraday trading, according to Benzinga Pro data.

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