Super Micro Computer Inc (NASDAQ:SMCI), one of the leading server manufacturers and Nvidia's ($NVDA) third-largest customer, is facing a probe by the U.S. Department of Justice (DOJ) over allegations of accounting irregularities.
The investigation, which is in its early stages, stems from claims made by a former employee and whistleblower, Bob Luong, as well as a report by short-seller Hindenburg Research.
Luong, who filed a whistleblower lawsuit in April, accused Super Micro of engaging in accounting violations, including transactions involving the CEO’s family and rehiring employees previously dismissed for similar misconduct. The lawsuit has become a key element in the DOJ’s inquiry.
Super Micro recently delayed the filing of its 10-K annual report for fiscal year 2024, citing the need for additional time to assess its internal controls over financial reporting. The company, once valued at $72 billion, has seen its market cap reduced to $22 billion, wiping out $50 billion in value.
The Hindenburg report, released in August, accused Super Micro of accounting issues and possible sanctions violations. Following that report, the company’s stock fell by 12%, and Super Micro firmly denied the claims. Despite the company’s rebuttals, these accusations, along with the ongoing whistleblower lawsuit, have now attracted federal scrutiny.
The DOJ’s investigation could have significant implications for the server maker, as it works to maintain its position within the fast-growing AI sector, where it serves as a critical supplier to companies like Nvidia. A court hearing related to Luong’s lawsuit is also scheduled, potentially shaping the direction of the probe in the months ahead.
The company's stock has reacted sharply to the news, with trading halted earlier in the day as shares plummeted nearly 18%.