Supermicro is experiencing a real stock market tear. The North American chip company It is sinking 30% during the day in the face of what could be a huge crisis. Indeed, EY announced its departure from the firm following significant discrepancies linked to its accounts. According to the audit itself, it had shown “concerns on various governance-related issues”. EY announced this in a filing to the US Securities and Exchange Commission (SEC).
“At the end of July, EY raised concerns with the audit committee on several issues related to governance, transparency and integrity in communications (with the auditor),” the company comments in the letter. The company refers to internal control issues regarding “financial reporting and presentation of the annual report, which presented a significant risk.”
From Super Micro, they announced that they would appoint a special committee and oppose Cooley LLP and the Secretary Advisors. But EY has already made a decision: “we are resigning due to information that has recently come to light which leads us to no longer trust management or the audit committee and no longer want to be associated with the financial statements prepared by this direction”.
This latest episode with EY is not the last problem that Super Micro has encountered with its accounts and which has caused panic. In August this year, the company was accused of accounting irregularities by bear fund Hindenburg Research. The company said it took a short position after detecting flaws in its accounts. The company then delayed the presentation of its results, which preceded a collapse of 25% in a single session.
In his indictment, Hindemburg explained that the AI company, then valued at $35 billion (and now at $19 billion), had encountered problems since 2017, when the company was delisted from Nasdaq for not having presented results. They recalled that in 2020, the SEC accused it of “widespread accounting violations” of more than $200 million in improperly recognized revenue, while understating expenses. A situation which caused “artificially high profits”.
According to Hindenburg, “three months after paying the SEC’s $17.5 million fine (for these reasons), Super Micro agreed to rehire the executives involved in the accounting scandals.” The company says it interviewed a former company salesperson who defended that “almost everyone who was laid off came back.” This management would have once again “relaunched the inadequate accounting of its invoicing” and “circumvented internal accounting controls”. Now, EY’s decision two months after having abandoned it after having once again lost confidence brings a dark cloud over the matter and gives rise to the idea that there could be a problem in the accounts of the giant of l ‘AI.
