Nvidia, a prehistoric producer of graphics cards, has been fined $5.5 million by the US Securities and Exchange Commission for failing to disclose to investors how much 2017-2018 revenue came from crypto miners.
This $5.5 million is a settlement with the SEC regarding “Inadequate disclosures about the impact of cryptography.” This specific case dates back to 2017, a time when the actions of an end-of-the-planet crypto digger made it very difficult for anyone else to buy a new graphics card, before the same people and a global chip shortage made matters worse.
In 2018 filings, Nvidia reported earnings of $9.714 billion, half of which were recorded in “Gaming,” but without correctly indicating the role that cryptocurrency played in these numbers. The numbers mentioned rose significantly in fiscal 2017, by as much as 52% in one quarter.
The SEC report states, “During consecutive quarters of Nvidia’s fiscal year 2018, the company failed to disclose that crypto mining was a significant component of its physical revenue growth from the sale of gaming-designed and marketed GPUs. “
That is, when its earnings began to rise that year, Nvidia did not properly tell its investors why. When Nvidia acknowledged the massive mining market, it produced its line of “Cryptocurrency Mining Processor” (CMP) GPUs specifically targeting cryptocurrencies, but according to the SEC, their workers knew that increased gaming GPU sales were related to cryptocurrency as well. The report states,
Some of the company’s sales staff, particularly in China, have reported what they believe are significant increases in demand for gaming GPUs as a result of crypto mining. Additionally, while the company was unable to track when and which GPUs were purchased for gaming and which for the purpose of crypto mining, company employees estimated using various assumptions that the impact of crypto mining was at levels indicating that crypto mining was significant. Factor in the annual growth in gaming revenue over the relevant period.
Nvidia was required to disclose this distinction at all BrazilIssuing Forms 10-Q, but, the Securities and Exchange Commission says, has not yet done so despite the information being available. The reason this is important to the SEC is the volatility surrounding the crypto bullshit, which means that Nvidia hasn’t given investors the full picture as to why the numbers are soaring. This means that investors were less able to ‘ascertain the likelihood that past performance was indicative of future performance’.
The accompanying Securities and Exchange Commission press release adds,
The SEC order also found that Nvidia’s omission of material information about the growth of its gaming business was misleading because Nvidia had released statements about how other parts of the company’s business were moved by demand for cryptocurrency, creating the impression that the company’s gaming business was like that. It is not significantly affected by crypto mining.
This obviously means that investors have been “deprived” of “information critical to evaluating the company’s business in a key market,” according to the SEC’s head of enforcement, Christina Littmann.
(For those playing the drinking game at home, Section 17(a)(2) and (3) of the Securities Act of 1933, along with the “Disclosure Provisions of the Securities Act of 1934.” Drink!)
This was despite investors said “routinely” asking Nvidia’s senior management “how much gaming revenue has increased during this time frame driven by crypto mining”. It appears that by the end of fiscal 2018, Nvidia began recognizing the role of cryptocurrency and its volatility, but in the meantime it “offered and sold securities, including issuing shares as compensation to some employees under the company’s employee incentives. It plans to sell shares under the employee stock purchase scheme.”
Nvidia refused to acknowledge or deny these findings, but instead agreed to a cease and desist order, paying a $5.5 million fine. You know, the way you act when you definitely don’t admit to doing something wrong. ($5.5 million representing 0.05% of the company’s 2018 declared revenue. This number is meaningless.)
Kotaku She reached out to him to ask if Nvidia wanted to offer its side of this story, but her spokesperson told her, “We will decline to comment.”
Like the edge NotesThis crypto volatility proved to be a real problem in late 2018, when the entire Ponzi scheme market collapsed, and Nvidia was forced to cut projected earnings by half a billion dollars.
Cryptography: Everything is available to everyone since 2009.