Super Micro Computer Inc. leaders misled investors with positive statements about the server maker’s financial performance before a short seller flagged potential accounting manipulation, according to the latest shareholder lawsuit filed against the company.
Super Micro CEO Charles Liang, senior vice president Sara Liu, and other leaders let the company improperly recognize revenue, circumvent internal controls designed to prevent financial reporting errors, and engage in other inappropriate business practices, investor George Keritsis said in a derivative suit filed Wednesday in the US District Court for the Northern District of California.
Keritsis cited an investigation from short seller Hindenburg Research, which released an Aug. 27 report that said it uncovered “glaring accounting red flags” at Super Micro. The server maker then announced on Aug. 28 it would delay filing its annual report to assess its internal controls over financial reporting, according to the shareholder suit. Super Micro stock dropped about 19% that day, the investor said.
A special board committee found “no evidence of fraud or misconduct on the part of management or the board of directors,” the company said Nov. 5. But Super Micro’s stock has failed to reverse course on a weak outlook, posing a risk
“The company’s financial results and positive statements concerning the Company’s business, as well as operational and compliance policies, were materially false and misleading,” Keritsis said in his complaint. “Defendants violated the Company’s own internal policies, making the intentional decision to prioritize profits over legal compliance.”
A Super Micro representative didn’t immediately respond to a request for comment.
Super Micro is facing at least three other investor suits filed after the Hindenburg report. The Keritsis suit and the three other cases all seek damages over alleged securities fraud.
The Arnold Law Firm represents Keritsis.
The case is Keritsis v. Liang, N.D. Cal., No. 5:24-cv-07753, complaint filed 11/6/24.
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