Nvidia’s investigation into CEO Jensen Huang over his affair with an alleged Chinese spy may hinge on decisions by company board member Stephen Neal, a longtime white-collar defense attorney whose extensive resume includes dealing with corporate scandals.
Neal, the former CEO of the Cooley law firm, is Nvidia’s lead independent director and head of corporate governance.
Nvidia has not named the investigators who will probe the allegations surrounding Huang, but the company has said its board is leading the probe with help from outside counsel.
Neal’s experience makes him a likely key figure in the investigation.
Nvidia’s board has said there is “no reason to believe that either national security or Nvidia secrets were compromised” by Huang’s admitted affair with Alice Huang, who had been an executive with Megaspeed, a Singapore-based Nvidia customer.
China dismissed U.S. intelligence conclusions that Alice Huang was a spy, which were first reported by The New York Times.
Jensen Huang, one of the most powerful businessmen in the artificial intelligence boom, has said he would “cooperate fully” with the investigation.
Nvidia’s board has 10 independent members, including a former president of Taco Bell, a former Eli Lilly executive, and the former vice chairman from Goldman Sachs.
Neal’s background
Neal has litigated cases across securities, bankruptcies, antitrust, takeovers and more, according to his Cooley bio. And he’s conducted several investigations for multiple boards of directors, including at General Motors, where he advised the company in disputes with Ross Perot.
Neal has also conducted several investigations for committees of directors and independent directors, though most of those client names are confidential. He’s also handled investigations with the Securities and Exchange Commission for both corporations and individuals.
When he joined Nvidia, Neal was also the chairman of the board of directors at Levi Strauss. He stepped down in 2021 after reaching the mandatory board retirement age of 72, the company said at the time. The retailer did not immediately respond to CNBC’s request for comment on Monday.
Neal joined Nvidia’s board in 2019. He is chairman emeritus and senior counsel at Cooley, and was the firm’s CEO from 2001 to 2008.
Neal did not respond to a request for comment from CNBC.
Neal’s past clients include Elizabeth Holmes, the convicted fraudster who founded the blood-testing startup Theranos, and late financier Charles Keating Jr.
Neal and other Cooley lawyers represented Holmes in a class-action civil lawsuit in Arizona federal court over Theranos’ blood-testing services, which produced bogus results. In September 2019, Neal and his colleagues asked to be removed from the case because Holmes could not pay their legal bills.
A judge granted that withdrawal motion less than two months later.
In 1989, Neal was hired to represent Keating, who had become the face of the massive savings and loan scandal in the United States as head of American Continental, which owned the California-based thrift Lincoln Savings & Loan.
Keating’s campaign contributions to five U.S. senators โ none of whom were charged with wrongdoing โ earned them the notorious sobriquet “The Keating Five.”
Keating was sentenced in 1992 to up to 10 years in prison by Los Angeles Superior Court Judge Lance Ito for an extensive fraud. Ito later gained fame as the judge in O.J. Simpson’s murder trial.
Keating ended up serving less than five years after that conviction and a federal one were overturned on appeal.
Neal represented Keating in his efforts to overturn his convictions. In a 1997 article about Keating, Time magazine called Neal “the legal Houdini behind his release.”
Neal also has ties in and around Silicon Valley.
In November 2022, in the wake of the collapse of the $32 billion cryptocurrency firm FTX, the company’s founder, Sam Bankman-Fried, nominated Neal to serve as chairman of the board of FTX Trading, the FTX-affiliated hedge fund Alameda Research, and a third affiliate, West Realm Shires, as part of a Chapter 11 bankruptcy petition.
But Cooley said Neal was “unable to serve in” those positions, Business Insider reported at the time.
Neal received his law degree from Stanford, where Bankman-Fried’s parents had been law professors.
Neal is also chairperson of the trust for Meta’s Oversight Board, which is responsible for examining whether Meta’s decisions to remove or leave up content on Facebook, Instagram or Threads were in line with the company’s policies and values.
And on Tuesday, the journalist Theo Baker, whose articles as a freshman reporter on The Stanford Daily at Stanford University about allegations against that school’s president Marc Tessier-Lavinge led to his resignation, said in an X post that Tessier-Lavinge had hired Neal “to try to stop my reporting on allegations of research misconduct from coming out.”
Looking to corporate governance
Cooley’s history with Nvidia goes back decades.
The law firm said it incorporated the company in 1993 and has served as its principal outside corporate and litigation counsel for roughly three decades. Cooley handled Nvidia’s initial public offering in 1999.
Investors will be closely watching the investigation, and its emphasis on independence, as the process unfolds, according to Brayden King, a professor of management and organizations at Northwestern University’s Kellogg School of Management.
“You definitely want somebody leading it who people can look at and say, ‘OK, we believe this is a report that we can fully believe and trust that the outcome is the right outcome,'” King told CNBC. “That’s what investors are looking for. They just don’t like the instability that comes with all of this.”
King said the Nvidia investigation sits at a unique intersection of Wall Street and Washington, where the company is likely navigating its next steps to try to appease both groups.
Because Nvidia’s reputation is closely tied to Huang’s, King said, a transparent investigation will be key to regaining and retaining shareholders’ trust. He added that not having an immediate CEO succession plan in place is only impeding that confidence.
“I think the board realizes that they’re doing an independent investigation in part because they really need to understand to what extent there are real problems here, and they also know that if they don’t do an independent investigation, then there will be lingering concerns about whether their key stakeholders can trust the company,” King said.
If the investigation shows that national security was indeed put at risk, King said, the company will need to take “very strong measures” to restore its reputation.
“That will basically come down to having to put structures in place in corporate governance to assure that this can’t happen again,” King said. “The independent review is going to have to be truly independent, and it’s going to have to be candid enough that people believe that we can restore some normalcy around how the company operates.”
It’s also likely influencing how other tech companies, particularly those in the AI space, think about their own corporate governance structures and how they might navigate increased scrutiny of their leaders, he added.
Broader implications
Marcel Kahan, a professor of law at New York University, said he’s not surprised that Nvidia may have been exposed to industrial espionage.
Because the company operates in such a high-visibility and crucial sector, Kahan said companies like Nvidia have to be careful in their operations and whom they trust with their information. The investigation could mean the company may consider adding additional governance committees to ensure this doesn’t happen again.
The revelations about its CEO will also likely mean more specialized training for Nvidia and its law firms to keep trade secrets close.
He also said the company is likely prioritizing an in-depth investigation over transparency to investors, focusing on recruiting “the best of the best” to assist with the probe.
“Nvidia is one of the most valuable companies on Wall Street,” Kahan told CNBC. “I think, given all the attention that’s being paid to it, this is one of the instances where I would not be that worried about anything being done in an underhanded way.”
Still, although Nvidia is a major company with massive market influence, the controversy may not make much of a dent in corporate governance structures, according to Kathryn Harrigan, a professor of business leadership at Columbia Business School.
Harrigan said because Wall Street and Silicon Valley have seen similar controversies play out before, this scandal may simply be following the script of its predecessors.
“Is it going to change the basic structure of the AI build-out? Probably not,” she told CNBC. “You sometimes wait years to get on their schedule if you have an order for chips. It’s not like you can magically switch from one vendor to another.”
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