A trust run by Nvidia director Mark Stevens and his wife sold 4,236,740 Nvidia shares between 31 August and 18 September for about US$947 million, according to three Form 4 filings with the US Securities and Exchange Commission. The last sale came seven weeks before Nvidia’s board opened an investigation into reports about chief executive Jensen Huang, who resigned on 12 November.
Yahoo Finance reported the sales on 13 November. The filings show every share came from the Third Millennium Trust, of which Stevens and his wife are co-trustees. Stevens joined Nvidia’s board in 2008 and served on it before that from 1993 to 2006, Nvidia says. Dates below are US dates unless noted.
What the filings show
| Dates | Shares sold | Weighted average prices | Proceeds |
|---|---|---|---|
| 31 Aug to 2 Sep | 1,848,501 | US$220.06 to US$226.27 | US$411 million |
| 3 to 4 Sep | 1,022,239 | US$227.70 to US$234.00 | US$236 million |
| 18 Sep | 1,366,000 | US$219.72 to US$220.42 | US$300 million |
| Total | 4,236,740 | about US$947 million |
The trust held 5,207,271 Nvidia shares before the first sale and 970,531 after the last, so it sold about 81% of its stake. Stevens still reports 27,532,893 shares in total: 11,544,612 held directly, 15,017,750 through the Envy Trust and 970,531 through the Third Millennium Trust.
On 2 September a Form 144, the notice an insider files before selling, listed a proposed sale of 5,000,000 shares worth US$1.09 billion through Merrill Lynch. It names the Third Millennium Trust and the 970 Foundation, where Stevens is a director, as the sellers. The three Form 4s total 763,260 shares fewer than the notice, and no Form 4 reports the rest.
It wasn’t the trust’s first sale of the year. A Form 4 shows it sold 885,000 shares for about US$186 million at roughly US$210 a share on 18 June.
No trading plan in the filings
A Rule 10b5-1 plan is a trading schedule an insider files in advance, and it gives the insider a legal defence against insider-trading claims. The box that marks a sale as made under such a plan is unticked on all three Form 4s, and their footnotes cite no plan.
Nvidia’s quarterly report for the three months to 26 July lists plans adopted by director Aarti Shah, general counsel Timothy Teter and chief financial officer Colette Kress. It lists none for Stevens. Yahoo Finance says a sale without a plan isn’t a red flag on its own, because insiders sell for reasons such as raising cash.
What came after the sales
On 8 November Nvidia’s board said it was opening an independent investigation “in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort”. On 10 November it said it had retained Joon Kim, a former acting US attorney for the Southern District of New York, and his firm Wachtell, Lipton, Rosen & Katz.
Nvidia’s filing with the SEC says the board accepted Huang’s resignation as president, chief executive and director on 11 November. Nvidia announced it on 12 November, which was 13 November in New Zealand, naming Kress interim chief executive and Harvey Jones its first board chair.
Nvidia’s shares closed at US$166.19 on 12 November, Gotrade reports, citing Yahoo Finance data. At that price the 4,236,740 shares the trust sold are worth about US$704 million, against the US$947 million it received.
What the filings don’t show
The filings report what the trust sold, not why it chose those dates. Nothing in the Form 4s, the Form 144 or Nvidia’s statements connects the sales to the reporting about Huang, and none of them explains why the trust sold in three batches. The Form 144 carries the standard representation that the seller knows of no undisclosed material adverse information about the company.
Nvidia reports its third-quarter results on 17 November US time, its first since the investigation began.
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