Gensler says Nvidia board faces ‘tough choices’ on Huang

Former Securities and Exchange Commission Chair Gary Gensler said Monday that the central question in Nvidia's ↘ 4.30% investigation of CEO Jensen Huang is whether investors were misled. He said the company's directors will face "tough choices" once the inquiry ends. Gensler, who now teaches at MIT, made the comments on CNBC's "Squawk Box". His remarks came a day after Nvidia's board opened an independent review into reports that Huang was the target of a foreign intelligence effort.cnbc.com

Materiality and the board

"The question to answer is whether they've misled any of their shareholders," Gensler told CNBC. He said the case comes down to materiality, the legal test of whether information would matter to a reasonable investor. He pointed to the stock's premarket decline as evidence: "I think we've passed that threshold." Nvidia shares fell more than 5% in early Monday trading, according to the same report. They had already dropped 13% through Friday after the first reports about Huang's relationship came out, Yahoo Finance reported.finance.yahoo.com+1

Gensler also asked, "Did he mislead his board?" He noted that the SEC brought several cases against executives who misled directors or the public while he led the agency. He stressed how central Huang is to Nvidia. "Some say he's got 60 direct reports. He's got his hand in every consequential piece of Nvidia," Gensler said. "Once they get the results of the investigation, they'll have some tough choices." He added that regulators should not "look the other way" because of Nvidia's importance to the economy.

AI repricing warning

Gensler said the probe comes at a sensitive moment for markets. "Nvidia is at the center of all this. It's propping up the whole AI trade right now, and I think we will have a repricing in the market sometime in the next year or so," he said. He said he could not predict when that repricing would happen.finance.yahoo.com

The investigation

On Sunday, Nvidia said a committee of independent directors, working with outside counsel, would run the inquiry. The board said it has "no reason to believe" that national security or company secrets were compromised, Reuters reported. In an email to staff, Huang admitted he had been "unfaithful" to his wife and said he would cooperate fully. The probe follows a New York Times ↗ 1.07% report that U.S. intelligence officials had concluded Alice Huang, a former executive at Nvidia customer Megaspeed, was a Chinese intelligence asset. Beijing called that claim "baseless," AFP reported.afp.com+1

Fortune reported that the review could also look at statements Nvidia and its spokespeople have made since 2025 about Megaspeed. The next dates to watch are close together. House Republican committee chairs have asked Huang for a closed-door briefing on November 18, and Nvidia reports quarterly earnings on November 17, Yahoo Finance noted. The board has not set a date for finishing its review.fortune.com+1