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Super Micro's stock price surges after key ruling
Are you a chief financial officer looking for a change?
Or maybe you're a chief compliance officer or a general counsel looking for a new gig.
Related: Markets edge higher to start December. Movers: Super Micro, Lululemon, Norwegian Cruise Line
If any of these positions floats your boat, maybe head on over to Super Micro Computer ( SMCI ) , which has a number of new openings.
The job fair kicked off after the maker of liquid-cooled artificial-intelligence servers said that a special committee investigating complaints about corporate practices found “no evidence of misconduct” on the part of management or the board.
Super Micro said the board adopted all the special committee’s recommendations.
News of the report sent the company's shares soaring 29% to $42 on Monday.
The panel was comprised of Susie Giordano, an independent director who joined the board in August. Giordano, an attorney, has more than 25 years of experience advising corporate management, including 11 years at Intel.
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"The Special Committee’s rigorous investigation took over three months, with independent counsel devoting over 9,000 hours and the Secretariat forensic accounting team over 2,500 hours for the Review," the company said in a statement .
Super Micro said it interviewed 68 witnesses, including current and former employees, management, advisers and board members.
Super Micro panel: EY charges unsupported by the facts
The committee employed more than 50 attorneys from Cooley, outside contract review attorneys, and a team of forensic accounting specialists from Secretariat.
Super Micro's headaches began in August when short-seller Hindenburg Research released a scathing report on the San Jose, Calif., company.
After a three-month investigation, Hindenburg said it had “found glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.”
"All told, we believe Super Micro is a serial recidivist," the investment firm said. It cited evidence of "accounting manipulation, sibling self-dealing and sanctions evasion."
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The allegations reportedly sparked an investigation by the U.S. Department of Justice.
The situation got even more complicated in October when Ernst & Young, the company’s accounting firm, resigned due to concerns about Super Micro's financial statements.
"We are resigning 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," the Big 4 accounting firm said.
EY concluded that “we can no longer provide the audit services in accordance with applicable law or professional obligations.”
However, the special committee formed by the company's board to investigate the allegations said that EY’s resignation and the firm’s conclusions “were not supported by the facts."
EY did not immediately respond to a request for comment.
"The evidence reviewed by the Special Committee did not raise any substantial concerns about the integrity of Supermicro’s senior management or Audit Committee, or their commitment to ensuring that the Company’s financial statements are materially accurate," Super Micro said in a statement.
Allegations had prompted regulatory issues at SMCI
Super Micro’s shares tumbled last month after the company released disappointing unaudited financials and failed to provide specific plans to maintain its Nasdaq listing.
In 2018, Super Micro was temporarily delisted from Nasdaq for failing to file financial statements.
At the time, the Securities and Exchange Commission charged the company with “widespread accounting violations,” related mainly to more than $200 million in improperly recognized revenue and understated expenses, which resulted in artificially elevated sales, earnings, and profit margins.
Hindenburg had said that less than three months after paying a $17.5 million SEC settlement, Super Micro began rehiring top executives who were directly involved in the accounting scandal.
Related: Analysts update Super Micro stock price target after shocking disclosures
The special committee said that with respect to the rehiring of former employees, “the tone at the top of the company was appropriate and fully consistent with a commitment to proper financial reporting and legal compliance.”
The special committee's report also prompted varied reactions on social media.
"A big accounting firm doesn’t just resign without facts," one commenter said.
"Unbelievable," another person said. "The market believes their own insider committee who are their own employees who were chosen by the executives."
"EY such losers, probably got scared by shortsellers and had done a bad job themselves," read another comment .
Super Micro stock price surges, analysts cautious
The company said it had begun looking for a new CFO, adding that David Weigand would remain in the post until the board names his successor.
Kenneth Cheung, currently the company’s vice president of finance and corporate controller, was named chief accounting officer.
Super Micro had said it did not expect to restate its quarterly reports for fiscal 2024 or for prior fiscal years.
The company could still be delisted from Nasdaq because of its delayed financial reports, but Super Micro said it believed it would be able to complete and become current with its periodic reports.
Related: One big tech stock could profit from Super Micro’s disaster
The company has benefited greatly from the artificial intelligence boom thanks to its relationship with AI chipmaking giant Nvidia ( NVDA ) . Its sales soared, and its stock price surged to all-time highs until the allegations wiped away most of its gains.
The possibility Super Micro will escape mostly unscathed sent short-sellers scurrying, and buyers jumped in to ride shares to a 29% gain on December 2.
Investment firms, however, reacted cautiously to the committee's findings.
While the detailed report is “assuaging broad concerns,” analysts at JPMorgan said the investment firm would remain sidelined on the stock—maintaining an underweight rating—until visibility into compliance increases.
The next key points for investors to monitor include whether the new independent auditors, BDO, accept the committee's findings or decide to undertake their own independent review; and whether Nasdaq supports Super Micro's request for extended time to regain compliance with its listing requirements, JP Morgan said.
Analysts at Rosenblatt noted the special committee's findings, but given the uncertainty surrounding the company's financials, the firm suspended its rating, price target, and estimates on Super Micro pending an outcome that can determine its recommendation.
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