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The shareholders allege insiders received benefits others did not share. Groq rejects the claims, while Nvidia has described the transaction as licensing and hiring—not a company acquisition.
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The dispute turns on whether Nvidia’s reported $20 billion arrangement was a technology license or, in practice, a company sale that required Groq shareholder approval. Former shareholders Joshua Rubin and Benjamin Serebrin allege that conflicted directors failed to maximize value and that leaders benefited from side agreements and a later buyout they say undervalued their shares. Groq denies wrongdoing, and the complaint’s legal theory remains untested; Nvidia is not a defendant.
The complaint divides the reported $20 billion into a $17 billion non-exclusive technology license and $3 billion in restricted stock units for employees who joined Nvidia.
The lawsuit says roughly 150 to 200 Groq engineers moved to Nvidia alongside founder Jonathan Ross, president Sunny Madra, and other senior leaders.
Rubin and Serebrin allege that a majority of Groq’s board was conflicted and that affiliated funds stood to benefit from a later shareholder buyout.
Two former Groq engineers who held shares in the AI-chip startup have sued its leadership in Delaware over Nvidia’s reported $20 billion transaction. Joshua Rubin and Benjamin Serebrin allege the board shortchanged shareholders and bypassed a required vote while transferring valuable technology and employees to Nvidia. Groq calls the lawsuit meritless.
The complaint against Groq’s former board and CEO was unsealed on October 5, according to Bloomberg Law. Nvidia is not named as a defendant. The proposed class action alleges that leaders’ financial interests shaped a transaction that cost other shareholders billions of dollars.
The arrangement dates to December 2025, when Groq announced a licensing agreement for its inference technology—the technology used to run AI models. Founder and CEO Jonathan Ross, president Sunny Madra, and other senior leaders joined Nvidia. Groq said it would remain an independent company.
The lawsuit describes two components behind the $20 billion figure: $17 billion allocated to a technology license labeled non-exclusive, and $3 billion in Nvidia restricted stock units reserved for Groq employees who moved with the technology. Those stock awards were separate from the licensing payment.
Approximately 150 to 200 Groq engineers became Nvidia employees, the complaint says. In an email obtained by CNBC from around the announcement, Nvidia CEO Jensen Huang said the company planned to integrate Groq’s low-latency processors into its AI infrastructure to serve more inference and real-time workloads.
The complaint further alleges that lucrative side agreements benefited leaders who approved the deal. It says the board transferred Groq’s technology and engineers while securing billions of dollars in benefits for itself, senior management, and affiliated funds that other shareholders did not share.
According to the lawsuit, a majority of the board was conflicted, and investment funds that designated board members stood to receive windfall returns from a later shareholder buyout. The plaintiffs describe that buyout price as too low, linking their complaint about the original transaction to how shareholders were subsequently cashed out.
Groq said the licensing agreement delivered exceptional value for the company, investors, and employees, and pledged to vigorously defend itself. Its spokesperson said Groq remains focused on customers and building its AI inference cloud. The allegations have not been adjudicated.
The plaintiffs themselves acknowledge an unsettled legal question. The Times of India reports that their complaint says no Delaware decision has directly answered whether arrangements that transfer employees without acquiring the whole company should be treated like traditional mergers and acquisitions.
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