Super Micro's Auditor EY Resigns Amid Governance Concerns and DOJ Probe; Shares Plunge 35%

Oct 30, 2024, 01:14 PM

Super Micro Computer Inc. (SMCI) announced that its auditor, Ernst & Young (EY), has resigned amid concerns over governance, transparency, and the reliability of management's representations. EY stated, '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.' The resignation follows EY's communication in July 2024 of concerns regarding governance and internal controls over financial reporting. Earlier, in March 2023, SMCI fired its previous auditor, Deloitte. The company, which delayed its 10-K filing in August 2024, is under investigation by the Department of Justice for accounting practices. Following the announcement, SMCI's shares plummeted by up to 35% in pre-market trading. The company disagrees with EY's decision to resign, does not currently expect any restatements, and has begun the process of identifying a successor auditor. SMCI is scheduled to release its earnings on Friday.