SEC Concludes NVIDIA Investigation

In a move announced earlier this summer, the Securities and Exchange Commission officially concluded its investigation of graphics chip manufacturer NVIDIA Thursday, thus ending a formal accounting audit that began in 2002.

Under the final agreement, NVIDIA neither admitted nor denied any wrongdoing whatsoever, and agreed to enter into an administrative “cease and desist” order that prohibits any future violations in financial reporting, books and records, and internal control provisions of the federal securities laws. So far, the SEC has not assessed a penalty or fine against the Santa Clara, Calif.-based firm.

NVIDIA representatives declined to comment on the agreement, but in a prepared statement released late this afternoon, the company announced, “NVIDIA cooperated with the SEC throughout this process. The order has no impact on NVIDIA’s reported financial results.”

The SEC investigation began back in 2002, when the SEC began an insider trading probe after several midlevel company employees bought stock on news of an important contract the company had secured before the news was made public. The probe capped a tumultuous period in which the company admitted to over-reporting earnings for most of fiscal year 2002 and fiscal years 2000 and 2001, then restated the figures following an internal audit.

In the wake of this restating process, former Chief Financial Officer Christine Hoberg stepped down, and Corporate Controller Mary Dotz stepped into the position.

Since then, NVIDIA earnings reports have gone relatively unchallenged. For the second quarter of fiscal 2004, revenue increased to $459.8 million, compared to $427.3 million for the second quarter of fiscal 2003, an increase of 8 percent. Net income for the second quarter of fiscal 2004 was $24.2 million, or $0.14 per diluted share, compared to net income of $5.3 million, or $0.03 per diluted share, for the second quarter of fiscal 2003.

Shares of NVIDIA closed Thursday at $19.33, up one cent.