Key Takeaways
Supermicro Computer Corp. is reportedly under federal investigation over accounting questions. The investigation comes after short seller Hindenburg Research released a report in August that slammed the computer server maker for fraud, according to The Wall Street Journal. Earlier this year, a former employee filed a whistleblower lawsuit against Supermicro, alleging accounting irregularities.
Shares of Supermicro Computer (SMCI), or Supermicro, fell 15% on Thursday, the top decliner in the S&P 500, following reports that the U.S. Department of Justice (DOJ) is investigating the server maker for possible accounting and other violations.
The Wall Street Journal reported that the investigation comes after prominent short-seller Hindenberg Research claimed last month that it had found “new evidence of accounting manipulation, self-dealing by siblings and sanctions evasion” at Supermicro.
Hindenburg said in its report that it uncovered “clear accounting red flags, evidence of undisclosed related-party transactions, sanctions and export control deficiencies and customer issues.”
Supermicro whistleblower investigation
The investigation is still in its early stages, and prosecutors from the U.S. Attorney’s Office in San Francisco are contacting people who may have relevant information, the newspaper said.
He added that authorities appear to be investigating allegations made by a former employee who filed a whistleblower lawsuit in April against Supermicro and CEO Charles Liang for alleged accounting fraud.
Supermicro announced last month that it would delay the release of its annual report because management needed additional time “to complete its evaluation of the design and operating effectiveness of our internal control over financial reporting as of June 30, 2024.”
SuperMicro did not respond to Investopedia’s request for comment.
Supermicro’s shares hit an all-time high in March, when the company quadrupled in value in a year thanks to the artificial intelligence (AI) boom, but while the stock has slumped since then, it’s still on track to rise about 38% through 2024. Recently, the stock has fallen 15% to $387.21 a share.
Trading View
