Sunday, May 8th 2022
NVIDIA Pays $5.5 Million Fine After Failing To Disclose 2018 Crypto Revenue
The Securities and Exchange Commission today announced settled charges against technology company NVIDIA Corporation for inadequate disclosures concerning the impact of cryptomining on the company's gaming business. The SEC's order finds that, during consecutive quarters in NVIDIA's fiscal year 2018, the company failed to disclose that cryptomining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming. Cryptomining is the process of obtaining crypto rewards in exchange for verifying crypto transactions on distributed ledgers. As demand for and interest in crypto rose in 2017, NVIDIA customers increasingly used its gaming GPUs for cryptomining.
In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by cryptomining. Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance. The SEC's order also finds that NVIDIA's omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company's business were driven by demand for crypto, creating the impression that the company's gaming business was not significantly affected by cryptomining.
"NVIDIA's disclosure failures deprived investors of critical information to evaluate the company's business in a key market," said Kristina Littman, Chief of the SEC Enforcement Division's Crypto Assets and Cyber Unit. "All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate."
The SEC's order finds 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 order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures. Without admitting or denying the SEC's findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty.
The SEC's investigation was conducted by Brent Wilner of the Crypto Assets and Cyber Unit, and supervised by Diana Tani and Ms. Littman of the Crypto Assets and Cyber Unit.
Source:
SEC
In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by cryptomining. Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance. The SEC's order also finds that NVIDIA's omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company's business were driven by demand for crypto, creating the impression that the company's gaming business was not significantly affected by cryptomining.
The SEC's order finds 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 order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures. Without admitting or denying the SEC's findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty.
The SEC's investigation was conducted by Brent Wilner of the Crypto Assets and Cyber Unit, and supervised by Diana Tani and Ms. Littman of the Crypto Assets and Cyber Unit.
40 Comments on NVIDIA Pays $5.5 Million Fine After Failing To Disclose 2018 Crypto Revenue
What were the NV reported profits of mining in 2021 & 2020
Waiting for another adopt a mining card/ give them a gaming life pr statement again :laugh:
they were deprived of their meager dividends..
so can the investors get a round 2?
a billion sounds more like it. :)
Look at this idiocy, Gensler mentions Madoff but ironically it doesn't connect that one of the biggest issues with the market right is payment for orderflow which is a gift from Madoff.
One thing worth bringing up here: there seems to be some confusion as to what this fine is about. It's not a fine for selling cards for crypto mining, which is implied by comparing the fine to the revenue from such sales. It's a fine for misleading shareholders, specifically presenting (highly volatile and unpredictable) cryptomining revenues as if they were (stable and predictable) gaming revenues, which can mislead investors into seeing the company's growth as more stable and reliable in the long term than it actually is. This has no direct relation to the amount of revenue in cryptomining sales outside of it being significant enough to make a dent in overall revenue figures. Beyond that, the number is arbitrary and the link between the revenues in question and the fine is vague at best. If the fine is to be seen as punitive up against a specific number, that number must be any uptick in share price due to increased demand due to them playing off this crypto revenue as if it were gaming revenue - which obviously makes it incredibly difficult to gauge, but it's most likely not even close to the sum of crypto revenues themselves.