Super Micro's shares jump after server maker says review finds no evidence of misconduct

[December 03, 2024]  NEW YORK (AP) — Just over a month after Ernst & Young resigned as its public accounting firm, Super Micro Computer says a review committee has found no evidence of fraud or misconduct among the server maker’s leadership.

Super Micro is also searching for a new chief financial officer and appointing other executives per recommendations from the committee, which began its review several months ago — after EY communicated concerns over issues like transparency, internal control related to financial reporting and integrity of management while conducting its first audit for the company.

Additional information that emerged during this review eventually led EY to resign as Super Micro's public accountant in October. Super Micro, which disagreed with EY's decision, later appointed BDO as its new independent auditor last month.

Super Micro announced that the committee, formed by the board as well as external counsel, completed its review on Monday. The company said that the conclusions EY laid out in its resignation “were not supported by the facts” found in this probe — maintaining that there was no evidence of misconduct.

As a result, Super Micro does not expect past financial reports to be restated. Shares for Super Micro climbed over 20% Monday morning.

Beyond the findings of this review, Super Micro also laid out plans to appoint new leadership, which it says follow recommendations from the committee. Super Micro disclosed that it has begun looking for a new CFO, with David Weigand continuing in the role until the board names a successor. The company also said it would be “accelerating its search” for a chief compliance officer and for a general counsel.

Visitors walk past the 'Super Micro' both at the Computex Taipei exhibition, one of the world's largest IT expos, in Taipei, Taiwan, Tuesday, June 5, 2018. (AP Photo/Chiang Ying-ying)

In addition, Super Micro announced it has appointed Kenneth Cheung, current vice president of finance and corporate controller, as chief accounting officer.

It's been a tumultuous year for Super Micro — and EY's resignation wasn't the first time its accounting practices have come into question. Back in August, short-selling firm Hindenburg Research released a report alleging ample accounting manipulation at the company, pointing to “glaring accounting red flags” and evidence of undisclosed transactions. It also accused Super Micro of rehiring top executives that were directly involved in a 2018 scandal. At the time, Super Micro said it would not comment “on rumors and speculation.”

Following these accusations, The Wall Street Journal and others reported that the Justice Department was beginning a probe into Super Micro, citing people familiar with the matter.

Super Micro has been among tech companies recently riding a the artificial intelligence wave. In August, Super Micro reported fourth-quarter revenue of $5.31 billion, a more than 143% increase over the $2.18 billion it reported in the same quarter of 2023.

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