Nvidia’s value tumbles by $430bn since spy allegations, as major US law firm hired to investigate claims – business live

Rolling coverage of the latest economic and financial news Joon H. Kim, who will lead the investigation into whether Jensen Huang has been the target of a foreign intelligence effort, has an impressive career history – both in private practice and in government. From 2017 to 2018, he was Acting US Attorney for the Southern District of New York, where he ran a team of lawyers investigating securities and commodities…

Introduction: Nvidia, down $430bn, hires major US law firm to investigate alleged Chinese spy affair

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.

The crisis gripping Nvidia is gathering pace, with around $430bn wiped off the value of the world’s most valuable company since it was hit by a spying scandal.

Overnight, Nvidia announced it has hired a former top federal prosecutor to help probe chief executive Jensen Huang’s relationship with a suspected Chinese spy.

The company’s board have retained Joon H. Kim, the former acting U.S. Attorney of the Southern District of New York, and his firm Wachtell, Lipton, Rosen & Katz to conduct “a thorough and independent investigation”.

Wachtell is a heavyweight corporate law firm. In 2022 it was hired by Twitter to force Elon Musk to complete his $44bn takeover, for example, and has a track record of advising major companies on issues such as mergers and corporate governance.

It will now look into the circumstances of Huang’s affair – thought to be with AliceHuang, who US officials believe is a Chinese spy, and who worked for Nvidia customer Megaspeed.

Although Beijing has denied allegations that it operated an espionage operation targeting JensenHuang, Nvidia’s value has been buffeted this week.

Yesterday, its shares fell by almost 5.5%, adding to the 4.27% drop on Monday. This has pulled the company’s value down to $4.07tn, from $4.50tn before the story broke last weekend.

The agenda

9.45am BST: ECB President Lagarde taking part on panel discussion at 9th Paris Peace Forum in Paris

Noon BST: US weekly mortgage approvals data

2.15pm GMT: Chancellor John Healey quizzed by Treasury committee on the budget

Who is Joon H. Kim, who will lead Nvidia investigation?

Joon H. Kim, who will lead the investigation into whether Jensen Huang has been the target of a foreign intelligence effort, has an impressive career history – both in private practice and in government.

From 2017 to 2018, he was Acting US Attorney for the Southern District of New York, where he ran a team of lawyers investigating securities and commodities fraud, mail and wire fraud, public and private corruption, money laundering, cybercrime, and tax offenses.

Another high profile assignment landed on Kim’s desk in 2021, when heinvestigated multiple allegations of sexual harassment by New York Governor Andrew Cuomo.

It’s only a month since he joined Wachtell, Lipton, Rosen & Katz, the legal firm hired by Nvidia, from rival New York law firm Cleary Gottlieb Steen & Hamilton. There, he had specialised in white-collar criminal defense, internal investigations, regulatory enforcement, and commercial litigation.

In that role, Kim led an investigation into the workplace culture at the FederalDepositInsuranceCorp, following allegations of harassment and discrimination at the agency.

The drop in Nvidia’s share price this week may embolden the shareholders who are suing the company.

A lawsuit was filed in California this week, alleging that Nvidia and chief executive Jensen Huang mislead shareholders by not disclosing that the matter raised national security concerns.

Nvidia is facing a test of “institutional confidence”, warns Waleed Said, technical analyst at brokerage GivTrade:

Nvidia’s 5.47% decline to $168.89, extending its losses for a second consecutive session, has transformed an executive controversy into a test of institutional confidence. Approximately $430 billion in market value has reportedly disappeared across the two sessions as investors confront allegations involving CEO Jensen Huang’s personal relationship with a businesswoman suspected of connections to Chinese intelligence.

Independent directors have retained Wachtell Lipton, including former prosecutor Joon Kim, to investigate whether the relationship involved foreign intelligence activity or compromised company information. The allegations remain under investigation, and Nvidia says it has no reason to believe secrets or national security were compromised.

Nevertheless, Nvidia’s extraordinary valuation depends partly on confidence in Huang’s leadership, making executive continuity and China-related export exposure unusually consequential.

US envoy to China says relations are ‘bumpy’ after Nvidia affair

The allegations over Nvidia are testing relations between Washington DC and Beijing, according to the top US diplomat in China.

Ambassador DavidPerdue told Bloomberg Television:

“The situation with Nvidia is another reminder that we have to stay diligent.

“National security is part of this economic conversation because economic security is national security. And so, what we’re doing with China is bumpy right now.”