Suspicions of Accounting Fraud at Supermicro
The U.S. Department of Justice has launched an investigation into accounting fraud allegations against Super Micro Computer (hereafter Super Micro), one of the biggest beneficiaries of the artificial intelligence (AI) boom, the Wall Street Journal (WSJ) reported on the 26th (local time). Citing sources, the WSJ added that the investigation is still in its early stages.
Earlier in April, a former employee of Super Micro filed a complaint accusing Super Micro and CEO Charles Liang of accounting violations. Furthermore, last month, short-selling firm Hindenburg Research released a report after a three-month investigation alleging that Super Micro manipulated its accounting. Hindenburg Research pointed out in the report that Super Micro was fined $17.5 million following an investigation by the U.S. Securities and Exchange Commission (SEC) in August 2020 for accounting violations, but has not improved since then.
Super Micro is a manufacturer of servers for data centers and has been considered one of the biggest beneficiaries of the AI boom. Its stock price surged as it supplied servers equipped with the latest chips from Nvidia, which holds over 80% of the global AI chip market. The stock price, which was $13.80 at the end of 2018, continued to rise every year and even reached an intraday high of $1,229 on March 8. However, the accounting fraud allegations have caused the stock price to decline.
On the day the Department of Justice investigation news was announced, Super Micro's stock closed at $402.40, down 12.17% from the previous session. Its market capitalization has shrunk to about one-third of its peak value.
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