A federal judge in Washington has allowed portions of a securities fraud case against Monolithic Power Systems (MPWR) and two executives to proceed, finding that investors plausibly alleged that certain statements about the company’s power management chip performance and customer relationships may have been misleading.
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Explore MPWX for 2X leverage on MPWRThe case was brought by lead plaintiff Mirko Dardi on behalf of investors who purchased Monolithic common stock between February 8, 2024, and November 11, 2024. According to the amended complaint, the company and executives Michael Hsing and Bernie Blegen allegedly misrepresented the quality and performance of Monolithic’s power management integrated circuits, or PMICs, which were used in systems tied to Nvidia’s AI server business.
U.S. District Judge James L. Robart granted the defendants’ motion in part and denied it in part, concluding that several challenged statements could support securities fraud claims under Section 10(b) of the Securities Exchange Act, while other statements were non-actionable corporate optimism or puffery.
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Investors Alleged Nvidia Relationship Problems Were Concealed
The complaint alleged that Monolithic’s PMIC products suffered from quality-control and performance issues that affected Nvidia systems and damaged the relationship between the companies. Investors claimed Nvidia eventually lost confidence in Monolithic’s products, reduced orders, and shifted portions of its next-generation Blackwell business to competitors.
The court summarized allegations that Monolithic executives repeatedly told investors during earnings calls that product issues had been resolved and that the company remained deeply integrated into next-generation AI platforms.
Among the statements challenged were February 2024 remarks by CEO Michael Hsing asserting that Monolithic had “resolve[d] all these issues” during a rapid production ramp tied to Nvidia demand. Plaintiffs alleged that those statements were misleading because unresolved PMIC performance problems allegedly still existed at the time.
The court agreed those statements could be actionable because they contained embedded factual assertions capable of objective verification. Judge Robart wrote that whether Monolithic had actually resolved the PMIC quality issues could be proven true or false.
Court Finds Some Statements Actionable
The court also allowed claims tied to CFO Bernie Blegen’s May 2024 statements to proceed. During an earnings call, Blegen said Monolithic was “at the front of the design cycle” and integrated into the development of “next generation” products.
Judge Robart found that investors adequately alleged that those statements could have been misleading because the complaint claimed Monolithic was already losing positioning in Nvidia’s Blackwell platform at that time.
The court similarly allowed claims based on statements from August 2024 about strong revenue growth tied to AI demand and prior design wins. Judge Robart held that once the company chose to discuss demand trends and customer relationships, it had a duty not to present “material half-truths” by omitting adverse information about ongoing PMIC performance issues.
Some October 2024 Statements Were Dismissed
Not all challenged statements survived. The court dismissed claims based on certain October 2024 comments describing Monolithic’s products as the “best solutions” and “most power efficient.”
Judge Robart ruled those statements amounted to non-actionable corporate puffery and subjective optimism rather than verifiable factual representations. The order stated that the remarks were too vague and general to support liability for securities fraud.
Court Also Examined Scienter Allegations
The court further held that the plaintiffs plausibly alleged scienter, the required intent or deliberate recklessness element, at the pleading stage. The order pointed to allegations involving executive stock sales during the proposed class period, including claims that Hsing sold roughly $44.2 million worth of shares and Blegen sold approximately $21.9 million worth.
Judge Robart concluded that the timing and amounts of the stock transactions could support an inference of scienter when viewed alongside the alleged misstatements about PMIC performance issues and Nvidia-related business risks.
What Happens Next
Because the court denied the motion to dismiss in part, portions of the securities fraud claims will proceed into discovery and later stages of litigation. The ruling does not determine liability or establish that any securities laws were violated. Instead, the court found only that investors sufficiently pleaded certain claims to move forward under the heightened standards of the Private Securities Litigation Reform Act.
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