Nvidia faces a shareholder class action over personal conduct by former Chief Executive Officer Jensen Huang while holding up to $900 million in directors and officers liability insurance that leaves corporate indemnification costs exposed, according to the Financial Times.
Policy Gaps Expose Corporate Costs
The company bought directors and officers insurance through insurance broker Aon. “which protects the personal assets and legal defense costs of executives and board members” is the restriction of the Side A coverage in the contract, according to the Financial Times.
Side B reimburses the company for indemnification payments made to executives. Side C covers securities lawsuits against the company itself. Both Side B and Side C were omitted from the policy. Participating insurers on the policy include Beazley, AIG, and Chubb.
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Large U.S. publicly traded companies typically buy all three types of insurance together. This structure prepares firms for litigation arising from wrongful management judgment or actions.
“For a listed company, it is standard and in effect considered essential to have both A and B coverage,” said Aaron Le Marquer, head of policyholder disputes at British law firm Stewarts.
“In the U.S., most large listed companies also carry C coverage because litigation risk is so high,” Le Marquer added.
Lawsuits Follow Stock Decline
Shareholders filed a class action alleging that Nvidia and Huang concealed material facts or made misleading statements regarding alleged Chinese spy links.
Rosen Law Firm expanded the class period for its securities lawsuit through November 12, 2026. The action covers purchases made from December 19, 2024, through November 12, 2026, with lead plaintiff motions due by January 8, 2027.
So now we are hearing that the cfo was belittled by the ceo for trying to stop him from being too aggressive with who he backed–Nvidia. There is more to the story… Watch us this morning @SquawkStreet
The complaint alleges that Huang had an affair with a suspected Chinese spy who held a role at Megaspeed, a company accused of helping China evade export controls. It further alleges affairs with employees who reported to him in violation of company policy.
Nvidia shares dropped about 12.8 percent during the week of November 9 through November 13. Huang admitted to the affair on November 8.
BREAKING: The petition to reinstate Jensen Huang as CEO of Nvidia, $NVDA, has reached over 100,000 signatures. The petition has been signed by more than 53,000 shareholders and 6,200 current and former Nvidia employees. In the first 24 hours of the petition, nearly 15% of…
Nvidia shares moved against the Nasdaq index, which rose over 2 percent in the same period.
According to The Wall Street Journal, the market capitalization loss during that week reached $573 billion. This drop represents the largest weekly decline for any global company. Nvidia shares plummeted about 12.8% last week, wiping out $573 billion in market capitalization.
Executive Resignation After Disclosures
A New York Times report in late October detailed his relationship with a woman suspected of being a Chinese spy. Following this report, Huang admitted to the affair on November 8.
Subsequent allegations involving a corporate executive led to his resignation as CEO on November 12.
What position will Nvidia take regarding its insurance structure?
On the Nvidia situation: Nvidia's board can still make things right. It has now been 48 hours since Jensen Huang resigned from his role as CEO, President, and board member of Nvidia. Meanwhile, a thorough investigation has not been completed, countless critical questions are…
Earlier coverage: Nvidia’s Board of Directors Launched an Independent Investigation After CEO Jensen Huang