The US Department of Justice opened an investigation on Super Micro Computer, Inc. According to reports, SMCI is one of the biggest makers of high-performance servers and artificial intelligence racks. Following the Hindenburg report where serious accusations were thrown, the mainstream attention started gaining traction from investors as well as from the federal authorities.
Early Stage DOJ Probe
According to the Wall Street Journal, a prosecutor from the US attorney's office in San Francisco now formally investigates by contacting people who are knowledgeable about the allegations made by Hindenburg in its August 2024 report. Though the investigation is at an incipient stage, this reflects the serious consideration given to these claims by the DOJ.
 |
| Ai Image |
Allegations Against Super Micro Computer
Among the most salient charges made are:
Channel Stuffing: SMCI's sales group conspired with one another to inflate forecasts of demand in order that its excess products were shipped to the distributors.
Partial Shipments : Partial shipment of SMCI's products have been reported for the meeting the targets of shipments.
Recurring Accounting Violations : Although it has reached $17.5 million settlement with the SEC in 2020 over a multitude of accounting violations, it is still accused of re-hiring executives who have some kind of nexus with these violations and has resumed inappropriate revenue recognition in 2024.
Non-Arm's-Length Suppliers : A report reveals that SMCI paid almost $1 billion over the last three years to companies such as Ablecom and Compuware, adding another questionable financial practice.
Delayed Filings and SEC Filings Violation End
On receiving Hindenburg's report, the company put on hold its filing of an annual report which goes by the name Form 10-K. This report was expected to be filed on August 30th. For putting on hold its filing, the company has a chance of facing fines by the hands of the SEC while also facing a notice of noncompliance from the Nasdaq Exchange.
NVIDIA's Close Relationship with SMCI
An important point here is that Super Micro Computer is the third-largest customer of NVIDIA, and its two largest customers benefit highly from NVIDIA support. Even with investigations ongoing, SMCI has stated that it does not anticipate any "material changes" in its 2024 financial outcome because of its internal review.
The future status of the company, however, will also depend on further announcements in the investigation and on the review of the late filing of SMCI's financial report, which could be decisive determinants.
smcis mci newss uper micro computers, uper micro computer stock