SEC fines Nvidia $5.5 million for failing to disclose cryptomining's revenue impacts

Jimmy2x

Posts: 92   +8
Staff
Facepalm: The SEC issued a $5.5 million fine to Nvidia after determining it failed to declare critical sales data in its 2017-2018 revenue reports. The slap-on-the-wrist penalty was accompanied by a formal statement that Nvidia did not disclose cryptomining as a significant source of its revenue growth during the period in question, thereby depriving potential investors of crucial information.

The Securities and Exchange Commission's (SEC) May 6 press release cited Nvidia for "Inadequate Disclosures about Impact of Cryptomining." The SEC alleges that Nvidia did not report their increased crypto-based sales as required by Form 10-Q, instead attributing the increase to gaming-related growth.

The omitted sales information and fluctuations left investors with an incomplete picture of the company's performance, which is key to analyzing business risk and investment potential. Nvidia did not confirm or deny the allegations of improper disclosure and agreed to a cease-and-desist order accompanied by a $5.5 million penalty.

Brent Wilner, a member of the SEC's Crypto Assets and Cyber Unit, led the investigation into the company's filings and history. The news comes on the heels of the SEC doubling the size of the enforcement unit, which focuses on crypto assets, exchanges, crypto lending, decentralized finance (DeFi) platforms, non-fungible tokens (NFTs), and stablecoins. Wilner found that Nvidia violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934.

The enormous increase in gaming revenue across as little as a single fiscal quarter was an obvious red flag for investigators. Nvidia's 2018 filings supported the regulator's determination. That year the company reported $9.714 billion in revenue and attributed approximately half of that total to gaming. What does this all mean in plain English? Nvidia started making money hand over fist during the 2017/2018 mining boom, and they weren't forthcoming about "how" they made it.

While the investigation appears to be a win for consumers and investors who expect transparency from companies they support, the multi-million-dollar penalty is not likely to curb Nvidia's current plans or overall operations. Earlier this year, Nvidia released its financial results for the fourth quarter and fiscal year 2022. The green giant recorded quarterly revenues of $7.64 billion (a 53% increase) and record-breaking revenues of $26.92 billion (a 61% increase). Based on those numbers, the company can absorb the barely noticeable $5.5 million settlement payment without batting an eye.

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Sausagemeat

Posts: 1,597   +1,422
That should've been 5.5 with a 'b' not 'm'. 5.5mil for nVidia is like buying loaf of bread.
So a very small group of very rich investment bankers who lost a few million because they leaped before looking in 2018 should receive more money from Nvidia for their own failings? What decent human being would support that?

Im a scuba diver who’s currently working in a Marina and back in 2018 I could have told you that Nvidias revenue was boosted by crypto mining. And if I can know that, there’s no excuse for these investors.
 

McMurdeR

Posts: 516   +653
So a very small group of very rich investment bankers who lost a few million because they leaped before looking in 2018 should receive more money from Nvidia for their own failings? What decent human being would support that?

Im a scuba diver who’s currently working in a Marina and back in 2018 I could have told you that Nvidias revenue was boosted by crypto mining. And if I can know that, there’s no excuse for these investors.

A small group of investors who probably don't game or build PCs, and represent hundred of thousands through pension funds and other instruments. All kinds of people bought shares in Nvidia, and they were entitled to accurate information from the company.

In any case, it's evident that Nvidia are still at this lark. That fine isn't even a slap on the wrist.


 

nodfor

Posts: 246   +437
Didn't the stock price quadruple since? Any long term investor who was long back then, shouldn't have any complaints about stock performance.
 

Nobina

Posts: 3,778   +4,208
A small group of investors who probably don't game or build PCs, and represent hundred of thousands through pension funds and other instruments. All kinds of people bought shares in Nvidia, and they were entitled to accurate information from the company.

In any case, it's evident that Nvidia are still at this lark. That fine isn't even a slap on the wrist.
They should know a thing or two about the company they're investing their money in. This shouldn't be a surprise to anyone. Should they have accurate info? Of course, but that's like saying politicians should be honest. They should but if you think they are you are a fool.
 

Irata

Posts: 2,113   +3,657
Didn't the stock price quadruple since? Any long term investor who was long back then, shouldn't have any complaints about stock performance.
It seriously crashed after the mining bubble burst in late 2018. We are talking about double digit Billion $ losses.

Not everyone is a long term investor and known risks have to be properly disclosed in SEC filings.
AMD did have the volatile crypto market as a risk in their quarterly SEC filings back in 2018.
 

nodfor

Posts: 246   +437
It seriously crashed after the mining bubble burst in late 2018. We are talking about double digit Billion $ losses.

Not everyone is a long term investor and known risks have to be properly disclosed in SEC filings.
AMD did have the volatile crypto market as a risk in their quarterly SEC filings back in 2018.
If an investor had no clue nvidia was selling to miners back then, he wouldn't understand much by reading a line about crypto market volatility in some filling.

Sounds like a red tape thing.
 

Sausagemeat

Posts: 1,597   +1,422
A small group of investors who probably don't game or build PCs, and represent hundred of thousands through pension funds and other instruments. All kinds of people bought shares in Nvidia, and they were entitled to accurate information from the company.

In any case, it's evident that Nvidia are still at this lark. That fine isn't even a slap on the wrist.
Are you actually showing pity for these rich investment bankers? Are you attempting to claim that Nvidia is the predator and the bankers are the victims here? Is that really how you think?

I’m sorry but you deserve to lose money if you believed Nvidias 2018 figures were from gaming and I don’t think it’s cool to compensate them in the millions because they couldn’t be bothered to do their research.

I think you just want to throw rocks at Nvidia….
 

etempest

Posts: 61   +36
Are you actually showing pity for these rich investment bankers? Are you attempting to claim that Nvidia is the predator and the bankers are the victims here? Is that really how you think?

I’m sorry but you deserve to lose money if you believed Nvidias 2018 figures were from gaming and I don’t think it’s cool to compensate them in the millions because they couldn’t be bothered to do their research.

I think you just want to throw rocks at Nvidia….

Stock Holders =/= Gamers or follow tech news closely

A publicly traded company lied to it's owners, Nvidia broke the law.
They got caught and fined, however there's also very valid argument the fine won't impact them in any meaningful way.