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Key Takeaways
- Super Micro Computer shares plunged Wednesday after accounting giant EY resigned as the company’s auditor.
- The accounting firm said it is “unwilling to be associated with the financial statements prepared by management.”
- The resignation comes after months of speculation about Super Micro Computer’s accounting practices following a report from short seller Hindenburg research accusing it of “manipulation.”
Super Micro Computer (SMCI) shares plunged Wednesday after accounting firm EY resigned as the company’s auditor following months of speculation about the company’s accounting practices.
EY, one of the country’s “Big Four” accounting firms, told Super Micro Computer’s board the decision comes “due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the Audit Committee’s representations.” EY added it is “unwilling to be associated with the financial statements prepared by management.”
Super Micro Computer said it disagreed with EY’s decision, as the audit it hired EY last year to complete isn’t done yet, and that it takes the concerns the accounting firm raised about “whether the Company demonstrates a commitment to integrity” seriously.
EY Resignation Follows Months of Speculation on Super Micro Computer’s Accounting
The resignation comes as Super Micro Computer’s stock has tumbled in recent months amid speculation about its accounting practices after it delayed the filing of its annual 10-K and a report from short seller Hindenburg Research alleging “accounting manipulation” and other issues.
Last month, reports emerged that the Department of Justice had opened an investigation into Super Micro Computer’s accounting practices following the Hindenburg report.
Following EY’s resignation, Hindenburg founder Nate Anderson said the firm’s letter of resignation is “about as strongly worded as I have seen,” and suggested EY’s decision could make partners like Nvidia (NVDA) question doing business with Super Micro Computer going forward.
Super Micro Computer shares were down nearly 30% in early trading Wednesday at $35.71, though even with Wednesday’s losses, they’ve gained about one-quarter of their value since the start of the year.