(Bloomberg) — Super Micro Computer Inc. fell. The most in a month following a report that the US Justice Department was looking into a former employee’s claims that the server maker violated accounting rules, a few years after settling a bookkeeping case with the top financial regulator.
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A prosecutor in the U.S. Attorney’s Office in San Francisco recently reached out to 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 SuperMicro by former employee Bob Long.
Scrutiny of Super Micro has been heightened since Luong claimed earlier this year in Federal Court that the company sought to overstate its revenues. Hindenburg Research, a short-selling firm, later pointed to Luong’s allegations in a research report on Super Micro, alleging “blatant accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.”
SuperMicro declined to comment on the attorney general’s investigation, as did the Justice Department.
Earlier this month, SuperMicro CEO Charles Liang said in a letter to clients that the Hindenburg report contained “false or inaccurate statements about our company including misleading representations of information we have previously shared publicly.”
Shares of Super Micro fell 12% to $402.40 at Thursday’s close in New York, marking the biggest decline since Aug. 28, a day after Hindenburg Research released its report. The stock is up 42% this year.
The company sells high-powered servers for data centers and has seen an explosion in demand in recent quarters amid growth in artificial intelligence, making its shares a proxy for enthusiasm in the emerging technology.
In 2020, Super Micro settled an SEC investigation into its accounts by paying a $17.5 million fine. Super Micro neither admitted nor denied the regulator’s allegations as part of its settlement.
–With assistance from Chris Strom and Ian King.
(Updates with inquiry data in second paragraph.)
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