SEC sends letter to Nvidia
Nvidia has received a letter from the Securities and Exchanges Commission (SEC) seeking more details about its accounting practices.
The SEC wants answers to questions about Nvidia's 10-K filing for FY 2002 and 10-Q filing for the quarter ended April 28, 2002.
News of the letter, sent August 15, is contained in a press release announcing that Nvidia's CEO and CFO had certified filings made with the SEC in 2002. Considering the SEC's interest in this company's filing during this time, Nvidia is showing a certain panache.
In February this year, the graphics chip firm announced a review of accountancy practices following an SEC investigation into the timing of certain expenses and the recording of certain reserves - $3.6m recorded in Q2 and Q3 of fiscal 2000, should have been recorded in Q1. The amount is too small, for a company of Nvidia's size, to indicate serious cookie-jar accounting - i.e. profit smoothing between quarters, enabling companies to raid reserves when Qs are poor, to show profit growth.
But what else is the SEC looking for? Could the practices have artificially inflated Nvidia's share price, to the detriment of stockholders who bought during the time in question? That's what the inevitable class action suit, organised by Cohen, Milstein, Hausfeld & Toll, alleges.
The SEC's interest in Nvidia's accounting practices was prompted by an insider-trading investigation into a insider ring of Nvidia employees which used its knowledge of the Xbox win to profit from share sales.
On the Nvidia side, all is not well with the Xbox gig: outside North America, Xbox sales have failed to take light. In April this year, Nvidia confirmed through an SEC filing that it was being sued by Microsoft for damages over violation to the contract. Very briefly, Nvidia says that Microsoft has used up all the money - $200m - agreed in the contract. Microsoft says it hasn't. ®
Sponsored: 2016 Cyberthreat defense report