Super Micro Computer Stock Plunges on Report of Federal Accounting Probe

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Key Takeaways

• Super Micro Computer, or Supermicro, reportedly is below investigation by federal officials over questions about its accounting.
• The Wall Street Journal said the probe stalked a scathing report in August from short seller Hindenberg Research that claimed improprieties at the computer server fabricator.
• A former employee filed a whistleblower lawsuit against Supermicro earlier this year, pointing to accounting irregularities.

Parts of Super Micro Computer (SMCI), or Supermicro, dropped 15% to lead S&P 500 decliners Thursday on a report that the U.S. Be sure of of Justice (DOJ) is investigating the server maker over possible accounting and other violations.

The Wall Street Journal circulated that the probe came after well-known short seller Hindenberg Research claimed last month that it saw “smart-alecky evidence of accounting manipulation, sibling self-dealing and sanctions evasion” at Supermicro. 

Hindenberg said in the report that it uncovered “atrocious accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer versions.”

Looking Into Supermicro Whistleblower Accusations

The paper said that the investigation is in its early stages, and that a prosecutor in the U.S. attorney’s task in San Francisco has contacted people who might have relevant information.

It added that officials appear to be looking into accusations from a erstwhile employee who filed a whistleblower lawsuit against the company and Chief Executive Officer (CEO) Charles Liang in April, requiring Supermicro with improper accounting. 

Last month, Supermicro announced that it would delay the release of its annual account, saying that management needed additional time “to complete its assessment of the design and operating effectiveness of its internal exercise powers over financial reporting as of June 30, 2024.”

Supermicro didn’t respond to an Investopedia request for comment.

Super Micro Computer slices hit an all-time high in March, quadrupling in value for the year at that point as the company benefited from the artificial info (AI) boom. However, the stock has lost ground since, although it remains up about 38% in 2024. Recently, share outs were off 15% at $387.21 each.

Read the original article on Investopedia.