Nvidia board's idolatry of Jensen Huang risks shareholder lawsuits

The Megaspeed scandal unfolds

In October 2025, the New York Times reported that Megaspeed, a Singapore firm, had bought billions of dollars of Nvidia chips amid suspicion it was helping China evade U.S. export restrictions.

Nvidia's initial response

Nvidia said a review found no evidence its chips were diverted. CEO Jensen Huang described the Megaspeed dealings as normal, and the Nvidia board apparently accepted that explanation.

A short seller raises red flags

In May 2026, short seller Culper Research alleged uncomfortably close ties between Alice Huang, head of Megaspeed, and Jensen Huang. The board did not pursue the matter further.

“uncomfortably close ties”

U.S. intelligence assessment

Late last month, the Times reported that U.S. intelligence believed Alice Huang was a Chinese asset. A company spokesperson said the diversion claims had been debunked.

Jensen admits infidelity

Ten days after the intelligence report, Jensen admitted he had been unfaithful to his wife in a message that referred to national security concerns in the press.

The Caremark doctrine explained

Established in 1996 in Delaware Chancery Court, the Caremark doctrine holds that corporate directors have a fiduciary duty of oversight and breach their duty when they ignore red flags.

Blue Bell Creameries precedent

In 2019, Delaware's Supreme Court revived a suit against Blue Bell Creameries directors who had no system for overseeing food safety before a deadly listeria outbreak.

Boeing's board liability

In 2021, Delaware's Court of Chancery let claims proceed against Boeing's directors, who had no board committee responsible for airplane safety before the 737 MAX crashes. The case settled for 237.5 million dollars.

Questions for Nvidia's board

Plaintiffs' lawyers will ask whether any director knew Jensen had a personal relationship with an Alice Huang executive under review, or whether the board ever discussed Megaspeed at all.

Board minutes are discoverable

Shareholders can now get board meeting minutes with nearly complete transparency. Nvidia fought a books-and-records demand to Delaware's Supreme Court in 2022, but lost.

The conflict of interest problem

A Megaspeed affiliate bought about 4.8 billion dollars of Nvidia-powered equipment in under two years. A CEO in a personal relationship with a customer that size has an apparent conflict requiring disclosure.

Export control violations at stake

The Information reported that companies tied to Alice Huang helped Chinese buyers obtain 7.5 billion dollars of Nvidia chips, including banned ones laundered through neutral parties. Penalties range from fines to criminal prosecution.

Weak compliance oversight

According to Nvidia's proxy statement, the board committee responsible for trade compliance met three times last fiscal year. The company has no chief compliance officer.

National security concerns

According to the Times, U.S. officials concluded Alice Huang was recruited by China's Ministry of State Security to get close to Jensen and shape his views on chip sales to China.

No security expertise on board

Not one Nvidia director has a national security background. The president was reportedly briefed in late 2025, and three House committee chairmen now want Jensen in a closed-door briefing.

Succession risk unaddressed

Jensen has more than fifty direct reports and no identified successor. One prominent analyst estimates Nvidia would be worth twenty-five to thirty percent less without him.

Board's predetermined conclusion

The board's investigation statement declared it had no reason to believe national security or Nvidia secrets were compromised and expressed confidence in Jensen before any interviews were conducted.

“no reason to believe that either national security or Nvidia secrets were compromised”

Single-class shares offer no protection

Nvidia has one class of common stock, not dual-class shares. Jensen owns about 3.5 percent and casts 3.5 percent of votes. Yet no CEO in America has been more immune from proper scrutiny.

Board culture, not structure, matters

What entrenched Jensen was not the capital structure but the apparent idolatry of a board in thrall to him. Enron, Tyco, Wells Fargo and Boeing all had single-class shares and still failed.

Market reckoning begins

Nvidia closed at 168.89 dollars, down almost ten percent in two sessions since Jensen's admission.The stock is about thirty percent below its early-October record, a loss of more than 400 billion dollars in market value.