NVidia officials revealed on 14 February that the SEC had begun an investigation into the company's accounting practices during 2000 and 2001. The SEC is also investigating the possibility that $3.6m (£2.5m)-worth of product costs were recorded in the wrong accounting period.
NVidia chief executive Jen-Hsun Huang declined to comment on the SEC investigation, including the nature of the reserves under investigation.
"While the nature of this inquiry is being kept under wraps, we believe the reserves in question relate to the launch of the Xbox," said Eric Ross, a researcher at Thomas Weisel Partners. "We believe this because of the method of discovery as stated in the (NVidia) press release: through the separate employee insider trading investigation."
The SEC brought insider trading charges against 10 Nvidia employees in November following allegations that the 10 NVidia employees and five others purchased NVidia stock on 6 March , 2000, knowing that the company would win a contract to produce graphics chips for Microsoft's Xbox .
Following the announcement that NVidia had won the Xbox contract on 10 March, 2000, the accused allegedly sold their shares, reaping $1.7m (£1.18m) in profits.
NVidia has handed over e-mails and other materials dating from between December 1999 and March 2000 to government investigators.
The few details that are publicly available regarding NVidia's handling of the transactions indicate that the company may have delayed recognising Xbox-related revenue until after Microsoft's official unveiling of the Xbox, Ross said.