Super Micro Computer Stock Price Plummets 30% Amid Auditor Resignation

Super Micro Computer (US: SMCI) stock price plummeted by 30% following the resignation of its auditor, Ernst & Young. The 8-k report submitted by Super Micro Computer pointed out that Ernst & Young resigned as the company’s accountant.

The stock price of Super Micro Computer fell sharply, reaching a low of $32.3 before closing at $36.26, down 26.2% from its previous close.

The chairman of the company’s audit committee discussed the reasons for the resignation with Ernst & Young. Super Micro Computer has begun searching for a new accounting firm to take over and stated that it will not restate its second-quarter statements.

Ernst & Young’s resignation statement cited concerns over the company’s internal financial controls, governance, and transparency. The auditor stated that it “does not want to have any connection with management in the preparation of financial statements.”

The concerns raised by Ernst & Young were first highlighted by a short-selling agency in late July, which prompted the server company to appoint a special board committee to investigate its internal controls. The Board of Directors appointed an independent special committee to review the matter, as well as certain internal controls and governance procedures.

The Special Committee retained Cooley LLP and the forensic accounting firm Secretariat Advisors, LLC to represent the Special Committee and conduct the investigation. Ernst & Young and the Board received an update on preliminary information related to the review, but the final findings and recommendations have not yet been communicated.

Ernst & Young stated that its resignation was due to recent information that came to its attention, making it no longer possible to rely on the representations of management and the audit committee.

Super Micro Computer confirmed that Ernst & Young’s resignation is final, but does not agree with the auditor’s decision before the final investigation results. The company takes the concerns expressed by Ernst & Young seriously and will carefully consider the Special Committee’s findings and any remedial or other actions it recommends.