The race is on to sue Nvidia

Nvidia’s stock slid more than 4% on Monday, the first trading day after its board said it would investigate CEO Jensen Huang over his relationship with Alice Huang, an executive U.S. intelligence believes was spying for China.

Securities lawyers were already moving. Schall, Brown & Schwartz, a Los Angeles shareholder-rights firm, was among the first to plant a flag, announcing Monday morning that it’s investigating whether Nvidia made false or misleading statements, or failed to disclose information pertinent to investors. Robert Bartlett, a Stanford Law professor and securities law expert, expects it to have plenty of company.

“I would definitely wager that there’ll be a filing,” Bartlett said in an interview, adding that he wouldn’t be surprised if a case had been filed by the end of day Monday. Plaintiffs’ lawyers have good reasons to be first in line; under federal securities law, the first complaint triggers a public notice, and investors then have 60 days to ask the court to be named lead plaintiff. A firm that files early gets a head start on signing up investors with large losses, as well as on shaping the story of the case. Nvidia is headquartered in Santa Clara, so it’s likely we’ll see this in the Northern District of California. (It’s very possible a case has already been filed; newly filed cases can take up to 24 hours to be discoverable online.)