Super Micro Computer Under Investigation by Department of Justice – WSJ

Super Micro Computer, a significant player in the artificial intelligence server industry, is under investigation by the U.S. Department of Justice, as reported by the Wall Street Journal.

This inquiry stems from allegations made by activist short-selling firm Hindenburg Research, which expressed concerns regarding the company’s accounting practices. Sources familiar with the situation indicate that the investigation is in its preliminary stages, with a prosecutor from the U.S. attorney’s office in San Francisco seeking relevant information.

The investigation reportedly relates to a whistleblower lawsuit filed in April by Bob Luong, a former employee who accused Super Micro of accounting violations. Luong’s lawsuit claims that the company improperly recognized revenue from 2020 to 2022, including recording sales that were not finalized and sending incomplete products to customers.

Super Micro, recognized for manufacturing servers that utilize Nvidia chips for generative AI, experienced a significant stock surge during the AI boom. However, the company’s stock has declined sharply after reaching a valuation peak of $66 billion earlier this year. Following the Wall Street Journal’s report, Super Micro shares dropped approximately 12%.

Hindenburg’s August report further highlighted transactions between Super Micro and businesses owned by CEO Charles Liang’s family. The report also raised concerns about shipments to Russian companies, potentially in violation of U.S. sanctions.

In response to the report, Super Micro announced a delay in filing its annual report and established a board committee to assess internal controls. In a customer letter dated September 3, Liang defended the company, describing the allegations as “false or inaccurate.” Additionally, Super Micro has requested that Luong’s lawsuit be submitted to arbitration, with a court hearing anticipated soon.