SEC fined Nvidia $5.5 million due to inadequate disclosures about the impact of crypto mining

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The U.S. Securities and Exchange Commission (SEC) has confirmed that it has settled charges against Nvidia and is required to pay a $5.5 million fine for failing to provide shareholders with sufficient information to fully disclose the impact of cryptocurrency on the company’s gaming business.

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The SEC found that in several consecutive quarters in fiscal 2018, Nvidia did not describe cryptocurrency as a significant factor in the substantial revenue growth from the sale of its GPUs designed for gaming. In 2017, as demand and interest in cryptocurrencies increased, Nvidia’s customers increasingly used gaming GPUs for related businesses.

In its financial report at the time, Nvidia stated that the revenue of the game business had increased significantly, but this part of the increase was largely driven by cryptocurrency. After investigation, there is information confirming that Nvidia has internal information in this regard and is aware of the relevant situation. However, these volatile business-related cash flow fluctuations and material gains were not required to be disclosed on a table for investors to determine whether a past business is indicative of the likelihood of future performance. The SEC also found that Nvidia was misleading in omitting important information about the growth of its gaming business, which at the time made a statement that other businesses were being driven by demand for cryptocurrencies, but downplayed whether the gaming business was affected.

The SEC found that Nvidia violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure requirements of the Securities Exchange Act of 1934, finding that Nvidia failed to maintain timely, complete, and accurate disclosures. Without admitting or denying the SEC’s findings, Nvidia agreed to a cease-and-desist order and to pay a $5.5 million penalty.

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