Two former Groq engineers, Benjamin Serebrin and Joshua Rubin, have filed a stockholder class action and derivative complaint in the Delaware Court of Chancery (C.A. No. 2026-1291-LWW). The public redacted version was filed on 2 October 2026. The complaint challenges the December 2025 deal in which, it says, Nvidia took a license to Groq’s technology and hired its engineers, and it alleges that Groq’s board sold the company without the stockholder vote Delaware law requires.
Everything below about the deal is what the plaintiffs allege. The court has made no finding. Groq told CNBC the suit is meritless, and Nvidia is not a defendant.
Business Pill · THE LABEL IS NOT THE DEAL
A one-minute explainer of the idea behind this story: form and substance. It teaches the concept, not this story’s figures.
The key insight: The complaint turns on one question: whether a license plus a hired team is, in substance, a sale of the company. The plaintiffs say it was, and that Section 271 therefore required a stockholder vote that was never taken. Groq says the suit is meritless, and Nvidia’s CEO wrote that Nvidia is not acquiring Groq as a company. So this is a dispute about what the deal is, with the cash figures taken from the plaintiffs’ own account of the terms.
The complaint names seven directors of Groq, Inc.: Jonathan Ross, Alexander J. Davis, John Yetimoglu, Steven Trieu, Samir Menon, Andrew Rappaport and Youngme Moon. It also names Sundeep Madra, who was Groq’s President and Chief Operating Officer through 24 December 2025, and Groq, LLC, the entity Groq became on 22 June 2026.
The plaintiffs sue on behalf of former holders of Groq capital stock. The complaint says Serebrin was a Principal Software Engineer at Groq, that each plaintiff held Groq stock continuously through 22 June 2026, and that neither received an Nvidia employment offer. CNBC reports that both left Groq before the deal was announced, citing their LinkedIn profiles.
The complaint describes Groq as a designer of specialised chips for AI inference, built around a processor it calls the LPU. It describes Nvidia as the maker of the GPUs used to train and run AI models, the counterparty to the license agreement, and a company that “is not named as a defendant in this action”.
The cash payment schedule and the restricted stock units as the Serebrin and Rubin complaint states them (paragraphs 102 and 107). The figures are the plaintiffs’ allegations of the deal terms.
What the Complaint Says Nvidia Paid
The complaint says Nvidia and Groq announced and closed the deal on the same day, 24 December 2025. It says Nvidia agreed to pay $17 billion in cash: $13 billion at closing, $3 billion on the earliest of delivery of the licensed intellectual property, the first commercial release of an Nvidia product using it, or 30 June 2026, and $1 billion on the one-year anniversary of closing.
As of Groq’s 27 May 2026 Information Statement, the complaint says, Groq had received $16 billion. It expected the last $1 billion on 24 December 2026, subject to possible offset for Nvidia indemnification claims.
Separately, the complaint says “NVIDIA committed to grant certain employees restricted stock units with respect to NVIDIA stock with an aggregate grant date value of $3 billion, including and subject to their commencement of employment with NVIDIA.” It alleges, on information and belief, that about 150 to 200 Groq engineers moved to Nvidia.
The Core Allegation: No Vote
The complaint calls the structure a “reverse acqui-hire”. It defines that as a deal in which the buyer avoids a merger and stockholder vote and instead pays for employees and licenses. It says Nvidia took Groq’s technology and engineers, left the corporate shell behind, and labelled the license “non-exclusive”.
Its first count alleges that this amounted to a sale of all or substantially all of Groq’s assets under Section 271 of the Delaware General Corporation Law, which requires approval by a majority of stockholders before such a sale. The complaint says that “no vote was ever taken under Section 271 to authorize that transfer”.
The complaint says a group of stockholders it calls the Requisite Stockholders “purported to ratify” the license by written consent on 4 February 2026. It alleges that this came after the business had moved to Nvidia, and that the consent was executed by the same funds whose designees had approved the license.
The Conflict and Process Allegations
The complaint says four of the seven filled board seats were held by designees of four investment funds: Disruptive Technology Solutions LVII, Infinitum, Social Capital and BlackRock. It calls them the “Conflicted Funds” and says they are not defendants. It alleges, on information and belief, that Ross and Madra negotiated for Groq while negotiating their own employment and compensation with Nvidia. It says Ross received Nvidia equity out of the $3 billion commitment.
On process, the complaint says Groq’s Information Statement refers to no pre-signing auction, market canvass or fairness opinion. It says the board engaged Morgan Stanley on 29 December 2025, five days after closing. Morgan Stanley engaged with 36 potential bidders, the committee received three indications of interest, and, in the Information Statement’s words quoted by the complaint, “no bidder submitted a proposal that was compelling”. The board disbanded the committee on 9 February 2026.
The complaint alleges that the board then cashed out the stockholders in a conversion to an LLC on 22 June 2026, with a $650 million financing alongside it. It says a further $350 million round closed in August 2026 at an implied $3.5 billion post-money valuation, and that each of the four funds holds a contractually guaranteed seat on the board of managers of Groq, LLC.
What the Plaintiffs Ask For
The complaint has four counts: a direct claim under Section 271, a direct claim for breach of fiduciary duty under Revlon, a direct claim of breach of the duty of loyalty and entire fairness, and an alternative derivative loyalty claim.
The relief it requests includes a declaration that the license and the related workforce release were a sale of substantially all assets without the required authorization. It asks for rescission of the license and the other steps of the transaction or, where that is impracticable, rescissory damages. It also asks for disgorgement and a constructive trust over benefits that were not shared with the class.
What Groq and Nvidia Have Said
CNBC quotes a Groq spokesperson: “Our licensing agreement with NVIDIA delivered exceptional value for Groq, our investors, and our employees.” The spokesperson added that the lawsuit is meritless and that Groq will vigorously defend itself. CNBC reports that Groq said it would continue as an “independent company”, and that it has raised around $1 billion since June from investors including Nvidia.
CNBC also quotes an email to employees, which it obtained, from Nvidia CEO Jensen Huang around the time of the announcement: “While we are adding talented employees to our ranks and licensing Groq’s IP, we are not acquiring Groq as a company.” CNBC says Nvidia had been approached for comment; its report gives no Nvidia response.
The Structural Read
The complaint’s argument runs from form to substance. The form is a non-exclusive license, a release and individual offer letters. The substance, it says, is that Nvidia took the technology, the engineers and Groq’s standing as a competitor, and left the corporate shell.
The money is described the same way. The complaint puts the cash at $17 billion and the restricted stock units at $3 billion, and it says the units went to the hired employees and not through Groq’s treasury. It says that is how the board allocated value away from the other stockholders.
The complaint also relies on what Groq itself disclosed. It repeatedly cites Groq’s Information Statement for the board’s approval, the lack of a pre-signing process and the financings, and it says Groq obtained waivers of stockholders’ books-and-records rights.
The complaint, paragraph 194
“no vote was ever taken under Section 271 to authorize that transfer.”
Three Implications
THE LABEL IS THE DISPUTE The complaint says the word “non-exclusive” preserved the legal position that Nvidia had not acquired Groq. Groq and Nvidia’s CEO describe a license and hires, and not an acquisition.
THE NAMED DEFENDANTS ARE GROQ’S SIDE The complaint names directors, Madra and Groq, LLC. It says Nvidia is not a defendant, and it reserves the right to add the funds after discovery.
THE COURT HAS DECIDED NOTHING The filing is a complaint. The public version redacts several figures, and the defendants’ answer to the allegations in court is not in what we read.
What Is Not Established
We read the 93-page public redacted complaint in full and CNBC’s report of 5 October 2026. The public version leaves several figures blank, including what the class received per share, so we give no per-share price. The allegations are the plaintiffs’, and no court has ruled on any of them.
The complaint quotes Groq’s Information Statement, the license agreement and the written consents. We did not read those documents themselves. We did not contact Groq, Nvidia, the plaintiffs or the other defendants, and we draw no conclusion on whether the deal was a sale of assets or whether any director breached a duty.
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Two former Groq engineers allege in a Delaware Court of Chancery complaint that Groq’s board sold the company to Nvidia, through a $17 billion cash license plus $3 billion of Nvidia restricted stock units for hired employees, without the stockholder vote Section 271 requires and without a process to test the price. Groq says the suit is meritless, Huang’s email says Nvidia is not acquiring Groq as a company, and no court has ruled.
The complaint names Groq’s directors, Madra and Groq, LLC, not Nvidia, and its public version redacts the per-share amounts the class received.
A note on sourcing. This piece rests on the 93-page public redacted complaint in Serebrin and Rubin v. Ross et al. (Delaware Court of Chancery, C.A. No. 2026-1291-LWW) and CNBC’s report of 5 October 2026, both read in full. We haven’t checked the plaintiffs’ allegations independently, and we did not contact Groq, Nvidia, the plaintiffs or the other defendants. We draw no conclusion on the merits. Nothing here predicts an outcome or is legal or investment advice.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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