US Department of Justice investigates Super Micro Computer, reports WSJ

(Reuters) – The U.S. Justice Department is currently investigating the Super Micro Computer case, the Wall Street Journal reported on Thursday, nearly a month after short seller Hindenburg Research accused the AI ​​server maker of “financial statement manipulation.”

Super Micro shares fell about 12% following the report.

The WSJ report, citing people familiar with the matter, said the investigation is in its early stages and that a prosecutor at a U.S. attorney’s office recently contacted people who may have relevant information.

The prosecutor had asked for information that was apparently related to a former employee who had accused the company of accounting violations, the report said.

Super Micro delayed the filing of its annual report late last month, citing the need to review “its internal controls over financial reporting,” a day after Hindenburg disclosed a short position and made allegations of “accounting fraud.”

The short seller had relied on a three-month investigation that included interviews with former Super Micro executives and court documents.

Hindenburg’s allegations included evidence of undisclosed transactions with affiliated companies and failure to comply with export controls.

The company had rejected Hindenburg’s allegations.

Super Micro and the Justice Department did not immediately respond to Reuters’ request for comment on Thursday.

A review of tender documents conducted by Reuters earlier this year found that Chinese companies had purchased high-end Nvidia chips embedded in server products from various companies, including Super Micro, through resellers.

The US government is cracking down on the sale of such technologies to China.

Super Micro has been a big winner in the generative AI boom as other companies have embraced the technology needed for applications like ChatGPT, pushing the company’s market value up from around $4.4 billion to $67 billion in March.

The rally in AI stocks has since cooled as investors realized that the companies’ heavy investments would pay off more slowly than expected.

(Reporting by Akash Sriram and Aditya Soni in Bengaluru; Editing by Shreya Biswas)