(Bloomberg) — Super Micro Computer Inc. fell the most in a month after a report that the U.S. Justice Department is investigating an ex-employee’s claims that the server maker violated accounting rules, just a few years after settling an accounting case with a top financial regulator.
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A prosecutor from the U.S. attorney’s office in San Francisco recently contacted people who may have relevant information about the allegations, according to a person familiar with the matter. The investigation was reported earlier Thursday by the Wall Street Journal, which cited a case against Super Micro by former employee Bob Luong.
Scrutiny of Super Micro has intensified since Luong alleged in federal court earlier this year that the company had tried to overstate its revenues. Short-seller Hindenburg Research then referenced Luong’s claims in a research report on Super Micro, claiming “glaring accounting red flags, evidence of undisclosed related-party transactions, sanctions and export control failures, and customer issues.”
Super Micro declined to comment on the prosecutor’s investigation, as did the Justice Department.
Earlier this month, Super Micro CEO Charles Liang said in a letter to clients that Hindenburg’s report “contained false or inaccurate statements about our business, including misleading presentations of information we have previously shared publicly.”
Super Micro shares fell 12% to $402.40 at Thursday’s close in New York, marking the biggest drop since August 28, a day after Hindenburg Research published its report. The stock is up 42% this year.
The company sells high-performance servers for data centers and has seen an explosion in demand in recent quarters due to the growth of AI, making its stock a benchmark for enthusiasm in the emerging technology.
In 2020, Super Micro resolved a U.S. Securities and Exchange Commission investigation into its accounting by paying a $17.5 million fine. Super Micro has neither admitted nor denied the regulator’s allegations as part of the settlement.
–With help from Chris Strohm and Ian King.
(Updates with inquiry details in second paragraph.)
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