Nvidia’s Top Partner Super Micro Faces DOJ Probe – Hindenburg’s Damning Report Ignites Chaos

Nvidia's third-largest partner, Super Micro Computer, is now under investigation by the Department of Justice after Hindenburg Research leveled serious fraud allegations, claiming improper revenue practices and sales manipulation tactics.

Nvidia’s Key Partner Super Micro Computer Faces DOJ Probe After Hindenburg Fraud Claims Surface

Super Micro Computer (SMCI), a retailer of high-performance servers and liquid-cooled artificial intelligence racks, is allegedly the subject of an active investigation by the US Department of Justice, which is now being seen as evidence of the seriousness of the accusations made by the meticulous short-seller firm Hindenburg Research.

DOJ Opens Probe Into Super Micro Computer

To wit, the Wall Street Journal is now stating that a prosecutor linked with the US attorney's office in San Francisco has.

According to the claims made by Hindenburg Research in their August thorough brief attack on Super Micro Computer, we have recently reached out to pertinent individuals who have first-hand knowledge of what happened. These initial interactions do indicate that the DOJ is seriously considering Hindenburg's accusations, even though the investigation seems to be in its early stages.

Hindenburg's Fraud Allegations Gain Traction

Just in case you didn't know, Super Micro Computer was the target of several major accusations made by Hindenburg Research in their report:

• The SMCI sales team is purportedly involved in distribution channel stuffing, which involves the promotion of products to distributors based on artificially inflated demand forecasts.
• Super Micro Computer frequently executes partial shipments in order to achieve specific sales objectives and increase the total number of shipments.
• Super Micro Computer rehired its top executives who were responsible for the "widespread accounting violations" that led to a $17.5 million settlement with the Securities and Exchange Commission (SEC) in 2020. This occurred within a three-month timeframe. This subsequently led to the filing of an additional complaint in April 2024, which alleged that SMCI had resumed its improper revenue recognition practices just three months after reaching a settlement with the SEC.
• Ablecom and Compuware are examples of non-arm's-length suppliers to whom SMCI has paid nearly one billion dollars in the past three years.

Super Micro Computer Delays Annual Report

As a result of this damning revelation, Super Micro Computer has stated that it will postpone releasing its annual report on Form 10-K, as required by the SEC, in order to conduct an exhaustive internal investigation.

Super Micro Computer had to submit its annual report by August 30, 2024, since its fiscal year ended on June 30, 2024, as we mentioned in a recent devoted piece.

SEC Compliance Issues Heighten Investor Concerns

Because it has continued to postpone the submission of its annual report, the corporation is now facing the prospect of a likely fine from the SEC. Additional information provided by the Nasdaq Exchange states that the company was "not in compliance with NASDAQ Listing Rule 5250(c)(1), as a result of the Company’s delay in filing its Annual Report on Form 10-K for fiscal year 2024."

Super Micro Computer has maintained, as reported by WCCFTECH, over the past several weeks, that the company does not anticipate "any material changes" to its financial performance for the fourth quarter or fiscal year 2024 as a consequence of its running internal review.

Nvidia's Close Ties to Super Micro Raise Questions

Remember that Super Micro Computer ranks third among NVIDIA's customers. Additionally, NVIDIA is SMCI's largest client, while a business supported by NVIDIA is its second-biggest client.