Investing.com — Super Micro Computer (NASDAQ:SMCI), a major player in the artificial intelligence server industry, is under investigation by the U.S. Department of Justice (DoJ), according to a report from the Wall Street Journal (WSJ).
The investigation follows a report from activist short-selling firm Hindenburg Research, which raised concerns about the company’s accounting practices, the WSJ said, citing sources familiar with the matter.
The investigation is still in its early stages and a prosecutor with the San Francisco District Attorney’s Office is reportedly seeking information about the case, the WSJ reported.
The investigation appears to be related to a whistleblower lawsuit filed in April by Bob Luong, a former employee who accused Super Micro of accounting wrongdoing.
According to the WSJ, Luong alleges in his lawsuit that the company improperly reported revenue from 2020 through 2022, including by recording sales that had not yet been completed and shipping incomplete equipment to customers.
Super Micro, known for making servers with Nvidia (NASDAQ:NVDA) chips for generative AI, saw its stock price rise during the AI boom but has since fallen after peaking at $66 billion earlier this year, the WSJ reported.
According to the WSJ report, SMCI shares fell about 12% on Thursday.
In its August report, Hindenburg also highlighted transactions between Super Micro and companies owned by the family of CEO Charles Liang, and allegations of shipments to Russian companies in violation of U.S. sanctions.
The day after the report, Super Micro announced that it would delay the filing of its annual report and that it had created a board committee to review internal controls.
In a letter to clients on Sept. 3, Liang defended the company, calling the allegations in the short-seller report “false or inaccurate,” the WSJ reported. Meanwhile, Super Micro has requested that Luong’s lawsuit be moved to arbitration, with a trial scheduled for the near future.
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