(Bloomberg) -- Super Micro Computer Inc. fell the most in a month on a report that the US Justice Department is looking into an ex-employee’s claims that the server maker violated accounting rules just a few years after settling a bookkeeping case with a top financial regulator.
A prosecutor at the US 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 inquiry was reported earlier Thursday by the Wall Street Journal, which cited a case against Super Micro by former employee, Bob Luong.
Scrutiny has intensified on Super Micro since Luong alleged earlier this year in federal court that the company had sought to overstate its revenue. Short-seller Hindenburg Research subsequently referenced Luong’s claims in a research report about 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 inquiry as did the Justice Department.
Earlier this month, Charles Liang, Super Micro’s chief executive officer, said in a letter to customers that Hindenburg’s report contained “false or inaccurate statements about our company including misleading presentations of information that we have previously shared publicly.”
Super Micro shares fell 12% to $402.40 at the close Thursday in New York, marking the biggest decline since Aug. 28, a day after Hindenburg Research released its report. The stock has gained 42% this year.
The company sells high-powered servers for data centers and has seen an explosion of demand over recent quarters amid the growth in AI, making its shares a proxy for enthusiasm in the nascent technology.
In 2020, Super Micro resolved an investigation by the US Securities and Exchange Commission into its accounting by paying a $17.5 million penalty. Super Micro didn’t admit to or deny the regulator’s allegations as part of its settlement.
--With assistance from Chris Strohm and Ian King.
(Updates with data on inquiry in second paragraph.)
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