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The U.S. Supreme Court has unexpectedly dropped its review of a high-profile securities case against Nvidia Corp., marking the second time this year it has backed away from a shareholder class action it initially agreed to consider.

In a brief statement issued Wednesday, the justices dismissed Nvidia’s petition for certiorari, stating only that it had been “improvidently granted.” The court offered no further explanation for its decision.

This move mirrors a similar ruling just weeks ago, when the justices declined to proceed with a shareholder case involving Meta Platforms Inc. Both cases had advanced to oral arguments in October.

The Nvidia case, accepted by the Supreme Court in June, centered on crucial aspects of the Private Securities Litigation Reform Act (PSLRA). At issue was whether investors need internal company documents to substantiate claims of corporate misrepresentation and the extent to which they can rely on expert reports to bypass such requirements.

Investors alleged in a 2019 lawsuit that Nvidia and CEO Jensen Huang concealed the company's $1 billion exposure to the volatile cryptocurrency market. They claimed Nvidia's reliance on crypto miners as major buyers of its graphics processing units created significant risk, which was hidden from shareholders.

The alleged concealment unraveled in late 2018, according to the plaintiffs, when Nvidia reported a 7% drop in quarterly revenue, tied to a cryptocurrency market downturn. Following the announcement, Nvidia's stock plummeted by 28.5% over two trading days.

Nvidia countered that the investors lacked concrete evidence that Huang had reviewed internal crypto-related sales documents. The company accused the plaintiffs of using an external expert’s report to sidestep the PSLRA’s strict pleading requirements.

The investors, however, pointed to testimony from two former employees who they said corroborated their claims. Nvidia dismissed the testimonies as insufficient, arguing they failed to identify specific documents reviewed by Huang.

Last year, the Ninth Circuit Court of Appeals allowed the case to proceed, prompting Nvidia to take its appeal to the Supreme Court. But during oral arguments, justices appeared to reconsider their decision to hear the case, questioning whether it involved broader PSLRA issues or merely sought correction of a specific ruling.

Nvidia and Huang were represented by attorneys from Hogan Lovells and Cooley LLP, while the investors enlisted legal teams from Gupta Wessler LLP, Joseph Hage Aaronson LLC, and other prominent firms.

The case, formally known as Nvidia Corp. et al. v. E. Ohman J:Or Fonder AB et al., is now closed, leaving the Ninth Circuit’s decision intact and broader questions about PSLRA pleading standards unresolved.

Case Number: 23-970
Court: Supreme Court of the United States