Supermicro stock plummets 35% after accounting firm resigns on the spot after DOJ probe

Supermicro is in a lot of trouble right now, with its stock price plummeting 35% today after its accounting firm, Ernest & Young, resigned citing unreliable management and possible law violations.

2

Ernest & Young's letter was cited in an SEC filing, which explained: "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 and to be unwilling to be associated with the financial statements prepared by management, and after concluding we can no longer provide the Audit Services under applicable law or professional obligations".

The accounting firm also put into question Supermicro's ability to act with "integrity and ethical values". Supermicro has of course rejected Ernest & Young's claims in its filing, saying that there were "no reportable events" that would implicate Supermicro in any wrongdoing.

The thing is... it's not just Ernest & Young's resignation from being Supermicro's accounting firm, as the tech giant was already in trouble with the law. The Department of Justice opened an official investigation into Supermicro after Hindenburg Research accused the HPC/server company of manipulating its financial reports, and violating US export regulations into Russia and China.

Hindenburg Research's report from August was titled "Supermicro: Fresh Evidence Of Accounting Manipulation, Sibling Self-Dealing And Sanctions Evasion At This AI High Flyer" and accused the company of selling heavily to Russia in the wake of its invasion into Ukraine, corroborated by 3 months of interviews from former Supermicro staffers.