nVidia investigated by SEC!

[martrox]

quote from Wall Street Journal this morning:

"Meanwhile, Nvidia, a manufacturer of graphics semiconductors, disclosed that the Securities and Exchange Commission is investigating its accounting practices. Nvidia shares fell 7.2%."

[Dave Baumann]

From what I've heard I don't think it will amount to much though. It sounds as though the SEC are just scrutinising accounting practices in a little more detail after ENRON's collapse.

[flf]

You can't expect a company that bucks the curve and has a track record like theirs to not get investigated. Remember that nvidia employee who was prosecuted for insider trading? I'm sure there are folks trying to make a buck in there... but I doubt nvidia will have crossed the line.

[LeStoffer]

On 2002-02-15 18:57, flf wrote:
Remember that nvidia employee who was prosecuted for insider trading?


Exactly. And it was when nVidia forwarded some informations to SEC in regard to this investigation, that SEC came across some questions.

From the nVidia Press Release:

Based on its review of these materials, the SEC informed NVIDIA in January 2002 of specific questions relating to 1) the recording of reserves in the fourth quarter of fiscal 2000 and the first quarter of fiscal 2001; and 2) the possibility that certain product costs of up to $3.6 million should have been recorded in the first quarter of fiscal 2001, but were recorded in the second and third quarters in that same year.

NVidia claimed yesterday that the figures in question wasn't really anything big. (I don't recall the exact phrase though). This sound as an account abnormality to me, nothing more.

Regards, LeStoffer

[Doomtrooper]

There is more to this story unfolding, I was checking stock prices when I came across this Dated Feb.20.02...


Shareholder Class Action Filed Against NVIDIA Corp. By The Law Firm of Schiffrin &...
February 20, 2002: 11:02 a.m. EST



BALA CYNWYD, Pa. (PRNewswire) - The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:

Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Northern District of California on behalf of all purchasers of the common stock of NVIDIA Corp. ("NVIDIA") from February 15, 2000 through February 14, 2002, inclusive (the "Class Period").

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.

The complaint charges NVIDIA and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. NVIDIA designs, develops and markets three dimensional (3D) graphics processors and related software. The company's products provide interactive 3D graphics to the mainstream personal computer market. Specifically, the complaint alleges that as part of their effort to boost the price of NVIDIA stock, defendants misrepresented NVIDIA's true prospects in an effort to conceal NVIDIA's improper acts until they were able to sell at least $66 million worth of their own NVIDIA stock. In order to overstate revenues and assets in its 4Q 00, 1Q 01, 2Q 01 and 3Q 01, NVIDIA violated Generally Accepted Accounting Principles and SEC rules by engaging in an illegal accounting scheme. This scheme had the effect of dramatically overstating revenues and assets.

Then, on February 14, 2002 (after the close of the market), the company partially admitted that its past accounting for its prior results may be inaccurate in a press release entitled, "NVIDIA Corporation Conducting Review of Certain Transactions at the Request of the SEC." On this news the company's shares plummeted the following day.

Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, LLP, which has significant experience and expertise prosecuting class actions on behalf of investors and shareholders. For more information on Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com/">http://www.sbclasslaw.com/.

If you are a member of the class described above, you may, not later than April 21, 2002, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements.

[Livecoma]

Bah you know how many companies they are suing?


Its way to early to draw any final conclusions, but this whole enron deal has sparked a bit of a witch-hunt IMO...

[Doomtrooper]

I'm no legal expert but doesn't a class action suit have to filed by majority shareholders... ??

[Galilee]

Since NVIDIA is so evil :evil: I am sure they run a fishy business :wink:

[Doomtrooper]

Obviously somebody thinks something fishy is going on to file a class action suit.

[Galilee]

We'll have to wait and see. Americans are suing everyone all the time, I'll not goint to judge anyone before we know more :smile:

[gking]

The lawyers are attempting to cash in on the entire Enron fiasco.

A whole lot of laws were put in place in the late 80s/early 90s to make shareholder lawsuits easier to discard after law firms filed several hundred (thousand) shareholder lawsuits on questionable evidence.

Since Enron's collapse, those law firms have been trying to get as many shareholder lawsuits into the system as possible, under the pretense that if Enron was lying about finances, then other companies could be, as well. Milberg-Weiss has filed at least a dozen class action lawsuits since Enron's accounting fiasco became public knowledge.

These claims are best described by the wonderful adage, "98% of lawyers give the other 2% a bad name."

[Sonic]

I'm interested to see hwat this suit brings to light. I'm sure it will be nothing more than finding some incorrect accounts or something minor. I doubt it will be something huge.

Sonic

[Geeforcer]

Doomtrooper, just for the heck of it count the number of shareholder suits against ATI.

[Doomtrooper]

On 2002-02-24 08:08, Geeforcer wrote:
Doomtrooper, just for the heck of it count the number of shareholder suits against ATI.


Why ?? Does that affect this thread ? :rollseyes:

[Galilee]

Maybe to show that these things happen all the time :wink:

[Sabastian]

On 2002-02-24 19:09, Galilee wrote:
Maybe to show that these things happen all the time :wink:


Well Nvidia could be in a pile of sh it. If they have in the past generated false earnings these lawsuits could have a devastating effect. Consider a company takes a large short position against nvidia before earnings because they thought that they would miss their numbers and the stock would drop in value. But if nvidia pulled a fast one via channel stuffing or other means then posted positive numbers the short sellers could have been put out millions because the stock price increased as opposed to decreasing. I would think that these people were very interested in being paid back their loses. Also nvidia is selling a billion dollars worth of stock @ or around 50$ a share so this is another good reason why nvidia would like to have a good track record. There is good reason for suspecting nvidia of wrong doing here. ATi lawsuits are not founded nearly the same, in fact they may very well be unjustified. ATi was sailing along until nvidia launched the GF1 and made numerous design wins in a rather short period of time. e.g. In the run of one quarter. Literally eating ATi's lunch so ATi's earning short fall was not a matter of deceiving share holders but was a matter of crushing competition from nvidia.

Sabastian

[Geeforcer]

Doomtrooper:

That shows that BS lawsuits happen all the time.

Sebastian:

Of course suits against Nvidia have more merit then ones against ATi. After all, Nvidia is the dark all-consuming cloud of hellfire while ATi is the pillar of good and kindness.

This is what I posted in 3dgpu:

"The funny (or rather, sad) thing is, if you read the complain you'll see that it very little connection to the SEC inquiry:

One of the allegations:

"In order to overstate revenues and assets in its 4Q 00, 1Q 01, 2Q 01 and 3Q 01, as alleged in the complaint, NVIDIA violated Generally Accepted Accounting Principles and SEC rules by engaging in an illegal accounting scheme. This scheme had the effect of dramatically overstating revenues and assets."

SEC:

"Based on its review of these materials, the SEC informed Nvidia in January of specific questions relating to the recording of reserves in the fourth quarter of fiscal 2000 and the first quarter of fiscal 2001. The agency also raised the possibility that certain product costs of up to $3.6 million should have been recorded in the first quarter of fiscal 2001, but were recorded in the second and third quarters in that same year."

Obviously the law firms have a standard form that they don't even adjust to the circumstances of the particular case."

[Exposed]

I'm no legal expert but doesn't a class action suit have to filed by majority shareholders... ??


Being a shareholder has absolutely nothing to do with filing a class action lawsuit.

This is also the same lawfirm that filed class action lawsuites against Apple, Intel, Lexmark and a few others I can't remember at the top of my head....not just Nvidia.

[Exposed]

Obviously somebody thinks something fishy is going on to file a class action suit.



You know what's funny Doomtrooper, I did a background check on Millberg Weiss to confirm the names of other companies they had filed class action lawsuits against....and look what I found :grin:


http://www.milberg.com/ati/

Milberg Weiss Announces Class Action Suit
Against ATI Technologies, Inc.

New York - - May 24, 2001 - - The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on May 23, 2001, on behalf of purchasers of the securities of ATI Technologies, Inc. ("ATI" or the "Company") (NASDAQ: ATYT) between January 13, 2000 and May 24, 2000, inclusive. A copy of the complaint filed in this action is available from the Court.

The action, numbered 01-CV-2541, is pending in the United States District Court, Eastern District of Pennsylvania, located at 601 Market Street, Philadelphia, PA 19106, against defendants ATI, Kwok Yuen Ho, James Chwartacky and James Fleck. The Honorable Stewart Dalzell is the Judge presiding over the case.

The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 13, 2000 and May 24, 2000, thereby artificially inflating the price of ATI securities.

The Complaint alleges that throughout the Class Period, defendants repeatedly issued press releases highlighting the Company's strong revenue growth and industry-high gross margins. These statements were materially false and misleading because they failed to disclose that (i) the Company was experiencing declining demand for its graphics chipset products and was decreasing its prices in order to stimulate demand; (ii) two of the Company's primary competitors, S3 Inc. and Neomagic, were flooding the market with cheaper and better products, which was rendering ATI's product offerings increasingly unattractive; (iii) the Company was failing to writedown a material portion of its inventory, which was impaired given the current conditions in the graphics chipset market. Accordingly, the Company's reported operating results were materially overstated; and (iv) that defendants' opinions, estimates and projections concerning the Company, its business and earnings were knowingly lacking in a reasonable basis at all times. Finally, on May 24, 2000, defendants issued a press release which shocked investors by announcing that ATI would be reporting lower than expected revenues. Defendants also disclosed that ATI’s gross margins had declined to 21% and that the Company would be writing down $56 million worth of inventory. In response to this announcement, the price of ATI common stock declined precipitously – falling from $16.75 per share, on May 23, 2000, to $8.4375 per share on May 25, 2000.

If you bought the securities of ATI between January 13, 2000 and May 24, 2000, you may, no later than July 23, 2001, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss Bershad Hynes & Lerach LLP, or other counsel of your choice, to serve as your counsel in this action.

If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorneys:

Steven G. Schulman or Samuel H. Rudman
One Pennsylvania Plaza, 49th fl.
New York, NY, 10119-0165
Phone number: (800) 320-5081

Email: ATIcase@milbergNY.com
Website: http://www.milberg.com

[Exposed]

Goto to Millberg's main site http://www.milberg.com and read the number of class action lawsuites they have filed, it is almost ridiculous. They have even filed a class action lawsuit against K-mart for failing to cover prescription contraceptives. :lol: ("The complaint, filed in the Northern District of Georgia by Milberg Weiss, Heller Horowitz & Feit, P.C., the Law Offices of George Stein and the National Women’s Law Center, alleges that it is an unlawful employment practice to exclude prescription contraceptive coverage while including coverage for other prescription drugs. ")



:rollseyes:

<font size=-1>[ This Message was edited by: Exposed on 2002-02-25 04:08 ]</font>

[John Reynolds]

Well, "Obviously somebody thinks something fishy is going on to file a class action suit".

Sorry, couldn't resist. :lol:

[Doomtrooper]

On 2002-02-25 04:02, Exposed wrote:

Obviously somebody thinks something fishy is going on to file a class action suit.



You know what's funny Doomtrooper, I did a background check on Millberg Weiss to confirm the names of other companies they had filed class action lawsuits against....and look what I found :grin:


http://www.milberg.com/ati/

Milberg Weiss Announces Class Action Suit
Against ATI Technologies, Inc.

New York - - May 24, 2001 - - The law firm of Milberg Weiss Bershad Hynes &amp; Lerach LLP announces that a class action lawsuit was filed on May 23, 2001, on behalf of purchasers of the securities of ATI Technologies, Inc. ("ATI" or the "Company") (NASDAQ: ATYT) between January 13, 2000 and May 24, 2000, inclusive. A copy of the complaint filed in this action is available from the Court.

The action, numbered 01-CV-2541, is pending in the United States District Court, Eastern District of Pennsylvania, located at 601 Market Street, Philadelphia, PA 19106, against defendants ATI, Kwok Yuen Ho, James Chwartacky and James Fleck. The Honorable Stewart Dalzell is the Judge presiding over the case.

The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 13, 2000 and May 24, 2000, thereby artificially inflating the price of ATI securities.

The Complaint alleges that throughout the Class Period, defendants repeatedly issued press releases highlighting the Company's strong revenue growth and industry-high gross margins. These statements were materially false and misleading because they failed to disclose that (i) the Company was experiencing declining demand for its graphics chipset products and was decreasing its prices in order to stimulate demand; (ii) two of the Company's primary competitors, S3 Inc. and Neomagic, were flooding the market with cheaper and better products, which was rendering ATI's product offerings increasingly unattractive; (iii) the Company was failing to writedown a material portion of its inventory, which was impaired given the current conditions in the graphics chipset market. Accordingly, the Company's reported operating results were materially overstated; and (iv) that defendants' opinions, estimates and projections concerning the Company, its business and earnings were knowingly lacking in a reasonable basis at all times. Finally, on May 24, 2000, defendants issued a press release which shocked investors by announcing that ATI would be reporting lower than expected revenues. Defendants also disclosed that ATI’s gross margins had declined to 21% and that the Company would be writing down $56 million worth of inventory. In response to this announcement, the price of ATI common stock declined precipitously – falling from $16.75 per share, on May 23, 2000, to $8.4375 per share on May 25, 2000.

If you bought the securities of ATI between January 13, 2000 and May 24, 2000, you may, no later than July 23, 2001, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss Bershad Hynes &amp; Lerach LLP, or other counsel of your choice, to serve as your counsel in this action.

If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorneys:

Steven G. Schulman or Samuel H. Rudman
One Pennsylvania Plaza, 49th fl.
New York, NY, 10119-0165
Phone number: (800) 320-5081

Email: ATIcase@milbergNY.com
Website: http://www.milberg.com




When did this turn into a ATI debate, give it a rest <bleep>. :rollseyes:

[Althornin]

You know, all you damn guys assuming DoomTrooper is here just to bash nVidia (in this thread) and who keep bringing up ATI need to get a damn life. WTF?
Your comments have no place here, except to show what shitty people you are. I know, you will say "your comment is no better". Its the standard lamer response to soemone pointing out the fact that you were ASSUMING something about someone, and being a dick about it, while hijacking a thread FOR NO GOOD DAMN REASON.

Please folks, can we just grow up a little and stop labeling people so that when they post, we assign some specific motive to them without taking in the context of things? This is a thread about nVidia's lawsuits. You want to make one about ATI's? fine...you even want to let this thread drift to "video companies lawsuits"...fine!
But to use this forum in the way that you did pisses me off.

[dksuiko]

Althornin...

Are you trying to rant? There's a real obvious difference between one who actually rants and one who tries to rant. I've been getting the impression that you've been trying to rant - but failing. Though I can't put my finger on exactly why I feel that way...

-dksuiko

[DemoCoder]

I think the point of bringing ATI into the picture was to show that these lawsuits are very common. Some people were trying to argue that these lawsuits were legitimate and serious simply because they were "class action lawsuits" as if, that means that they are rare and aren't frivilous. Showing how the law firm sued other companies in the same industry for equally silly reasons is a good reason for citing them.



These are the same fools who get ahold of a SEC quarterly report and see all of this negative sounding language in the Risk section, e.g. we could lose all our customers and self-destruct at any time, and come to the message boards proclaiming that the company is in big trouble, because they haven't did their homework and are totally new to the world of wall street business.

I remember a time when people on the news.3dfx.com server where claiming NVidia stole (plagarized) 3dfx's 10-Q report because several paragraphs were identical, not realizing that these reports (and most legal documents) are simple modifications to existing boilerplate.

The whole Enron fiasco is overstated IMHO. I've been in 3 companies in the last 4 years that went bankrupt, and most of the people I know in Silicon Valley were in a couple of bust .coms. Moreover, these .coms lied to investors, board of directors, etc big time, and engaged in revenue tricks that make Enron look like angels.


For example, at a previous company I was at, a bunch of people from Softbank (a VC investor) were coming in to check out the office. The company only had 6 employees at the time, but a temp agency was hired and an additional 15 people were brought in. These people were taught to play-act, take customer "orders", and generally sit at their computer looking busy, all to put on a good show for the investors.

This same company threw a democratic fundraising party at the CEO's house, and hosted Clinton, trying to get Clinton and the democrats to push down some privacy laws that were going to hurt their spam/junkmail/advertising/datacollection business. (Clinton got boozed up and tried his best to give a speech around the "New Economy" fumbling up internet concepts and generally looking like an idiot)


During the internet bubble, everyone lost their rationality. That made it much easier to trick even seasoned investors into coming onboard companies that were total BS. It made it easy to trick employees into taking crap pay and working hours in exchange for worthless stock. Hopefully, with the Enron fiasco, people will see that this behavior is endemic, and demand much more detailed accounting practices.

And, hopefully people will totally downplay the crap that comes out of the mouths of CEOs and Wall Street Analysts who hype stocks up.

All that matters is the bottom line. Let's make sure that is audited properly. Ignore CEO and analyst pep talks about the stock and judge for yourself.




<font size=-1>[ This Message was edited by: DemoCoder on 2002-02-25 10:51 ]</font>

[Althornin]

"I think the point of bringing ATI into the picture was to show that these lawsuits are very common"

Then why were all the ATI comments targetted at DT? Thats my beef with it...

and as for dksuiko, whatever, dude. I dont really care, as your opinion=meaningless to me.

<font size=-1>[ This Message was edited by: Althornin on 2002-02-25 16:44 ]</font>

[Sabastian]

On 2002-02-24 22:36, Geeforcer wrote:
Doomtrooper:

That shows that BS lawsuits happen all the time.

Sebastian:

Of course suits against Nvidia have more merit then ones against ATi. After all, Nvidia is the dark all-consuming cloud of hellfire while ATi is the pillar of good and kindness.

This is what I posted in 3dgpu:

"The funny (or rather, sad) thing is, if you read the complain you'll see that it very little connection to the SEC inquiry:

One of the allegations:

"In order to overstate revenues and assets in its 4Q 00, 1Q 01, 2Q 01 and 3Q 01, as alleged in the complaint, NVIDIA violated Generally Accepted Accounting Principles and SEC rules by engaging in an illegal accounting scheme. This scheme had the effect of dramatically overstating revenues and assets."

SEC:

"Based on its review of these materials, the SEC informed Nvidia in January of specific questions relating to the recording of reserves in the fourth quarter of fiscal 2000 and the first quarter of fiscal 2001. The agency also raised the possibility that certain product costs of up to $3.6 million should have been recorded in the first quarter of fiscal 2001, but were recorded in the second and third quarters in that same year."

Obviously the law firms have a standard form that they don't even adjust to the circumstances of the particular case."



Hmm not sure what you are trying to say Geeforcer, the law firms are conducting lawsuits out of the scope of the investigation? How so let’s take a slight closer look at these statements. They really aren’t different.

SEC="the fourth quarter of fiscal 2000 and the first quarter of fiscal 2001."

Lawsuit allegations time period= "In order to overstate revenues and assets in its 4Q 00, 1Q 01"

This is the same time period in question.

SEC statement="product costs of up to $3.6 million should have been recorded in the first quarter of fiscal 2001[/b], but were recorded in the second and third quarters in that same year"

Lawsuit allegations time period="2Q 01 and 3Q 01, as alleged in the complaint, NVIDIA violated Generally Accepted Accounting Principles and SEC rules by engaging in an illegal accounting scheme"

In fact it seems the SEC seems to be concerned with a larger range then do these allegations. I understand that they are written differently but possibly you would consider taking a route in analysis comprehension so that this sort of thing does not evade your attention yet an additional instance in the future.

Not to bring this discussion to any sort of a quarrel, it is just that I don't fully seize just what it is that you are saying here. The time periods in question are precisely alike. Your argument here seems fairly ineffectual.


Sabastian