A Fortune commentary argues that Nvidia’s board of directors, long defined by its admiration of founder and CEO Jensen Huang, may have exposed itself to shareholder oversight litigation in Delaware Chancery Court — the state’s equity court, where governance disputes are heard for the many major companies incorporated in Delaware — after a series of disclosures involving the chief executive’s personal ties to the head of a Singapore chip customer under government investigation.

The commentary’s authors, corporate governance academics, open by acknowledging Huang’s stature in the business world. They describe him as a “visionary genius” whose vision as the “Godfather of AI” has improved billions of lives around the world and contributed greatly to American prosperity and innovation. They note that Huang has attended their Yale CEO forums, has been revered by CEOs across sectors and around the world for his bold entrepreneurial vision and revolutionary technological triumphs, and is a showcased contributor to their upcoming book, When Machines Act: The Promise and Perils of our Agentic AI Future, to be published by MIT Press and written with Two Sigma co-founder David Siegel.

Yet, the authors write, amid calls for Huang’s immediate resignation from top GOP voices — including Sen. Kevin Cramer of the Senate Banking Committee — and demands that he answer to Congress, there were blatant red flags in Huang’s recent leadership that were apparently missed by Nvidia’s board.

The Megaspeed timeline

In October 2025, the New York Times reported that Megaspeed, a little-known Singapore firm, had bought billions of dollars of Nvidia chips amid suspicion that it was helping China evade U.S. restrictions by laundering banned chips on the U.S. export restriction list to China through neutral countries. Nvidia said a review found no evidence its chips were diverted.

That reporting was followed in May 2026 by an explosive report from short seller Culper Research alleging “uncomfortably close ties” between Alice Huang, the head of Megaspeed, and Jensen Huang. Jensen Huang described the Megaspeed dealings as “normal,” and the Nvidia board, the commentary observes, was content to leave the matter there.

In late October, the Times reported that U.S. intelligence believed Alice Huang was a Chinese asset. A company spokesperson said the diversion claims had been “debunked” and described the relationship as “nothing unusual.” Ten days later, Jensen Huang admitted in a message that he had been unfaithful to his wife, a message that referred to the national security concerns in the press — a sequence the authors describe as troubling after all the repeated denials.

The fiduciary duty no genius nor idolatry can get around

The Caremark doctrine, established in 1996 in Delaware Chancery Court, holds that corporate directors have a fiduciary duty of oversight, and that directors breach their duty of loyalty when they make no good-faith effort to monitor the risks central to the business, or when they consciously ignore red flags. Delaware judges have long described such oversight claims as among the hardest in corporate law for shareholders to survive — a hurdle any future Nvidia claim would first have to clear.

Under that doctrine and its derivative variants, the authors note, several boards have run into trouble in Delaware Chancery Court for similar sins of omission in oversight. In 2019, Delaware’s Supreme Court revived a suit against the directors of Blue Bell Creameries, an ice cream maker whose board had no system for overseeing food safety before a deadly listeria outbreak. In 2021, the Court of Chancery allowed claims to proceed against Boeing’s directors, who had no board committee responsible for airplane safety before the 737 MAX crashes. That case settled for $237.5 million. The lesson of both, the authors write: on risks that can sink the company, the board must watch for itself, and the board cannot simply trust management, even when those risks were unforeseeable or unanticipated.

The questions directors should have asked

Plaintiffs’ lawyers, the commentary predicts, will now ask the questions directors should have asked many months ago. Who conducted the review that cleared Megaspeed? Did it report to independent directors or to management? Did any director know the CEO had a personal relationship with an executive of the customer under review? Did the board ever discuss Megaspeed, or Jensen Huang’s relationship with Alice Huang? Did any board members even ask about these topics?

The answers are in the board meeting minutes — and, alarmingly for Nvidia’s board, shareholders can now obtain those minutes with near-complete transparency. Nvidia knows this better than most companies for a deeply ironic reason: in 2022, it fought a books-and-records demand all the way to Delaware’s Supreme Court. Even after Delaware lawmakers narrowed those inspection rights in 2025, board minutes and board materials remain within reach of plaintiffs’ litigation. That, the authors note, is how the Boeing plaintiffs built their case.

The risks that landed on Nvidia

All of the major risks that have now landed on Nvidia in such dramatic fashion were exactly the risks directors should have been most alert to, the authors argue.

First, and most importantly, every board entrusted with protecting minority shareholders should be alert to management conflicts of interest. A Megaspeed affiliate bought about $4.8 billion of Nvidia-powered equipment in under two years. A chief executive in a personal relationship with an executive of a customer that size has an apparent conflict that Nvidia’s own code of conduct would likely have required him to disclose. And Megaspeed was no ordinary customer: by October 2025, both Washington and Singapore were investigating the firm.

That conflict, the authors contend, poisons the compliance record. When the questions first surfaced, Nvidia said it had visited Megaspeed’s sites and had no reason to believe chips were diverted — an assurance that came from people who report to a CEO with a personal tie to the customer being cleared, a tie no investor had been told about. Bloomberg reported that Nvidia’s general counsel went so far as to contact a senior Commerce Department official about the government’s Megaspeed probe. Did the board authorize that call, the authors ask? Did it even know?

Then comes national security and export-control evasion — a risk as “mission critical” as food safety at an ice cream maker or flight safety at Boeing. Nvidia makes what the authors call the most strategically sensitive product on earth, and The Information reported this week that companies tied to Alice Huang helped Chinese buyers obtain $7.5 billion of Nvidia chips, including banned ones laundered through neutral parties. That report is unconfirmed, and Megaspeed denies wrongdoing. But the penalties for export violations run from fines to criminal prosecution to the loss of export privileges, and a board should not have been waiting for verdicts before asking questions. According to Nvidia’s own proxy statement, the board committee responsible for trade compliance met three times last fiscal year, and the company has no chief compliance officer. How much did they know, and when?

The national security risk is larger still. According to the Times, U.S. officials concluded that Alice Huang was recruited by China’s Ministry of State Security to get close to Jensen Huang and shape his views on chip sales to China — an issue on which Jensen Huang has been vocal in Washington and in the media, arguing that the U.S. should continue to sell chips to China so that China is not building its own chips. No one has alleged that Jensen Huang knew Alice Huang was a spy, and Beijing calls the claims a smear. But the president was reportedly briefed in late 2025, and a secret memo circulated among policymakers this spring — the same year Jensen Huang was appointed to the President’s Council of Advisors on Science and Technology. Now three House committee chairmen want him in a closed-door briefing, and the president says the FBI is reviewing the matter. Yet not one Nvidia director, as Semafor noted, has a national security background. What questions were asked, and what prudent diligence steps were taken by the board?

Then there is the risk every board dreads: that management did not tell it the truth. On Oct. 29, a company spokesman described Jensen Huang’s interactions with Alice Huang as “not unusual or unexpected” — the routine customer contact of any CEO. The same week, Jensen Huang called the Megaspeed dealings “normal.” Nine days after that, he told employees he had been unfaithful to his wife and tied the admission to the national security concerns in the press. If directors approved those October statements knowing what Jensen Huang knew, the authors write, they could be in trouble. If they never asked him, that is the Caremark problem.

Shareholders have already paid. Nvidia shares closed at $168.89 on Wednesday, down almost 10% in the two sessions since the admission — a loss of more than $400 billion in market value, and a price about 30% below the early-October record. The authors argue the recent fall cannot be attributed merely to the broader AI sell-off, pointing to evidence of an idiosyncratic move: on Monday, as Nvidia fell 4.3%, the semiconductor index jumped nearly 7%, and direct competitors all rose, including AMD.

The last risk, the authors write, is one the board manufactured itself. Jensen Huang has more than 50 direct reports and no identified successor, and one prominent analyst estimates Nvidia would be worth 25% to 30% less without him. Succession is a director’s first duty, the commentary says, and these directors let one man become the company with no obvious succession plan until it was too late.

Even now, the reflex appears to be deference. The same statement that launched the board’s investigation declared, before a single interview, that the board had “no reason to believe that either national security or Nvidia secrets were compromised,” and that it had confidence in Jensen Huang. A board that announces its conclusion on the day it opens its inquiry, the authors write, invites the question of whether it has predetermined its preferred outcome rather than following the facts wherever they lead in a way that protects all shareholders.

No dual-class shares, and no shortage of entrenchment

The commentary also takes on structural governance arguments. The authors note they have been critics of Vice Chancellor Travis Laster of the Delaware Court of Chancery, who they say wrongly attacked them in his Cloudflare opinion as “advocates for dual class shares” and for founder control more broadly. They write that they are not advocates for anything, but rather fact-based academics with five decades of experience as a widely recognized scholar of corporate governance.

They have published extensively on dual-class shares — on when they work and when they do not — with academic analysis and quantitative research into the performance of companies with dual-class share structures, in outlets including the Harvard Law School Forum on Corporate Governance as well as FORTUNE, Chief Executive Magazine and many others. They have studied instances when dual-class shares work well, such as when a founder or family with real money at stake uses the protection to invest through cycles and outlast short-term activists, as at Berkshire Hathaway, Alphabet and The New York Times. They have also studied instances when dual-class shares should be retired, such as when they shield controllers with ulterior motives from consequence, as at WeWork under Adam Neumann or Paramount under the Redstones.

Critics of founder control, the authors write, tend to treat dual-class shares as the bogeyman behind every entrenched founder, and one share, one vote as the cure. Nvidia, they argue, is the case study that breaks that theory. The company has a single class of common stock, not dual-class shares. Jensen Huang owns about 3.5% of it and casts 3.5% of the votes. The board is declassified, every director stands for election every year, and a simple majority of directors could replace him as CEO at any meeting. On paper, he is as removable as any hired manager. In practice, no CEO in America has been more immune from proper scrutiny and oversight, the commentary contends.

What entrenched Jensen Huang was not the capital structure of the company, the authors write, but the apparent idolatry of a board that was socially and interpersonally in thrall to him. He earned the adulation honestly, building a company from a booth at Denny’s into, for a time, the most valuable company on earth. But the directors whose job was to provide effective oversight to guard shareholders’ interests, they say, apparently joined the congregation. No charter provision did that, and no proxy adviser would have caught it: Nvidia has the independent majority, the lead director, the annual elections and the single share class that the checklists of ISS and Glass Lewis reward.

Nor has one share, one vote ever been a vaccine against scandal: Enron, Tyco, Wells Fargo and Boeing all had it. One of the authors argued in the Harvard Business Review in 2002, after Enron, that failed boards routinely passed every structural test, and that what set great boards apart was a culture of open dissent, in which directors challenge the chief executive and each other. That was true then, the commentary says, and Nvidia shows it is true now. When it comes to effective oversight, what matters is the board’s oversight culture and quality, not checklist yardsticks such as one share, one vote.

How Nvidia’s board could be exposed to potential liability

Delaware needs no new invented legal theory to measure whether Nvidia’s board did its oversight duty, the authors write. If shareholders bring Caremark claims against Nvidia’s directors, the court will ask what the board knew and what it did to find out. The factual record any such claim would turn on is likely to emerge from threads already in motion: the board’s own investigation, the closed-door briefing three House committee chairmen have requested, and the FBI review the president described. The authors note they have called out the Delaware Court of Chancery when it overreaches, and will again. But failing to question a celebrated CEO about a customer under federal investigation, they argue, is no business judgment at all. Nvidia’s directors were paid to provide oversight over Jensen Huang, however brilliant — and in that duty, by all outside appearances, they apparently whiffed.

The commentary closes with Aristotle’s famous warning, “There is no great genius without a touch of madness,” and the psychiatric term for shared disorders, “folie à deux.” It is up to the board, the authors write, to ensure a company’s owners benefit from the genius of founders but are protected from the madness.

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