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Shares of Super Micro Computer (SMCI) are plummeting after a report from the Wall Street Journal revealed that the Department of Justice is investigating the company over alleged accounting irregularities. Super Micro Computer's trading was momentarily halted following the news.
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This post was written by Melanie Riehl
Michael, Darta was just talking about some of these high flyers coming down. One of them is Super Micro Computer. Those shares are plunging by almost 12%. And this is related to a report from the Wall Street Journal, which said the Department of Justice is investigating the server maker for alleged accounting irregularities. Now, Super Micro's trading was briefly halted following the news earlier. It's now down, as you can see, that big decline that we are seeing on the day. Um this sort of originated in a report from Hindenburg Research, the short selling firm, which came out with a report in late August and effectively said there were some accounting irregularities. It was based on some stuff that a whistleblower had come out with. And now it seems as though this has all caught the attention of the Justice Department.
Yes, exactly. And that's what the journal is reporting here, that a prosecutor at the US Attorney's Office in San Francisco asked for information. The journal saying that it appears to be connected to a former employee who, as you mentioned, accused the company of accounting violations. That that former employee filed a whistleblower lawsuit. And as you know, and we talked about this last month, short seller Hindenburg published that report about Super Micro and and did, you know, placed bets against the stock, relied in part on that former employee's allegations. This is a name that a lot of investors piled into as they thought a smart way just to leverage that mega AI trend. At this point, listen, still up strongly this year, but you are now down about 70% here from your intraday high.
Exactly. And, you know, this company did pay $17.5 million back in 2020 to settle some Securities and Exchange Commission claims that there were some accounting violations. Now, the whistleblower, the former employee there, says they fired some people. Super Micro fired some people related to that, but then rehired them. That is part of his allegations. So we'll bring folks any more developments that we get on this. But this is of course one of these AI-related darlings that we have been watching closely.
For sure.