Super Micro Computer stock (SMCI) plunged on Wednesday, dropping more than 32% after filings revealed accounting firm Ernst & Young (EY) was withdrawing from relationships with tech companies. did.
In his resignation letter, EY said: “I am resigning due to recently revealed information that I can no longer rely on the representations of management and the audit committee and that I no longer wish to be associated with the financial organization.” Once management has submitted a statement made and reached its conclusion, it will no longer be able to provide audit services in accordance with applicable law or professional obligations. ”
EY resigned while conducting an audit of Supermicro for the financial year ending June 30, 2024. In Wednesday’s 8-K SEC filing, Supermicro said in a statement that it “disagrees” with EY’s decision and is “working diligently to select a new auditor.” ”
“The resolution of the issues raised by E&Y or otherwise being considered by a previously announced special committee of the Board will result in the “We do not expect any revisions to our quarterly financial results for the fiscal year ending in the previous fiscal year,” Supermicro said in a statement provided to Yahoo Finance.
Supermicro announced it will provide a first quarter business update on Tuesday, November 5, the day of the US election.
EY’s resignation comes two months after a brief report by Hindenburg Research revealed allegations of “accounting manipulation” among the artificial intelligence high flyers.
The stock price rose earlier this year as investors cheered SMCI’s prospects in the AI data center space, but has now fallen over the past six months.
Hindenburg announced in August that a three-month investigation “revealed clear accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.” The company also revealed that it had taken a short position in Supermicro.
After this report, Supermicro delayed filing its annual report, and its stock price fell nearly 20% on August 28th. According to Supermicro’s SEC filings page, the company has not yet filed its 2024 annual report.
In September, the Wall Street Journal reported that the U.S. Department of Justice was investigating supermicrocomputers. The newspaper reported, citing people familiar with the matter, that the investigation was in its “early stages.” Additionally, the newspaper reported that prosecutors in the U.S. Attorney’s Office in San Francisco requested information about former employees accused of accounting violations.
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