SMCI Stock News: SMCI Stock Craters as Auditor Ernst & Young Resigns Amid Governance Concerns Super Micro Computer Inc. (SMCI) saw its stock plunge over 30% Wednesday morning after revealing that Ernst & Young (EY) has resigned as its auditor, citing concerns over the company’s governance, internal controls, and financial transparency. The sudden resignation, disclosed in an 8-K filing with the SEC, has fueled uncertainty for investors, causing SMCI shares to tumble significantly.
Ernst & Young’s resignation letter outlined severe concerns, stating that the firm could no longer rely on representations from SMCI’s management and audit committee. “We are resigning due to information that has recently come to our attention,” EY said, adding that it was “unwilling to be associated with the financial statements prepared by management.” The resignation follows months of EY raising issues with SMCI’s governance and the independence of its board, particularly regarding CEO Charles Liang’s influence on company oversight.
This news arrives amid ongoing scrutiny for SMCI. The company has been under a federal investigation, with the U.S. Department of Justice reportedly examining its financial practices. In addition, short-seller Hindenburg Research released a report in August accusing SMCI of “accounting manipulation” and citing undisclosed related-party transactions and other red flags. Following that report, SMCI delayed filing its 2024 annual report, which has yet to be submitted, further fueling investor concerns.
Super Micro, a prominent player in the AI server market with major customers such as Nvidia, AMD, and Intel, had seen substantial stock growth in 2023. However, with EY’s resignation, the company’s position has taken a severe hit. SMCI, which joined the S&P 500 in March, now faces pressure to address the governance and financial transparency issues outlined by its former auditor.
The company responded to the resignation, stating it disagreed with EY’s decision but would “carefully consider” findings from an ongoing internal review led by a special committee. SMCI has retained the law firm Cooley LLP and a forensic accounting team to investigate the allegations, although no conclusions have been reached.
As investors watch closely for developments in SMCI’s financial reporting and regulatory situation, the stock’s recent drop underscores the risks tied to unresolved auditing and governance issues.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult a qualified financial advisor or conduct your own research before making investment decisions.
