The law firm of Robbins Geller Rudman & Dowd LLP, as reported by the Storage Newsletter, disclosed that in a class action lawsuit entitled Averza v. Super Micro Computer (No. 24-cv-06147; Northern District of California), the specified server equipment manufacturer, and certain of its executives are accused of violating the Securities Act of 1934.
Let us recall that earlier the investment company Hindenburg Research published a devastating report on Supermicro’s operations. In particular, agreements between related parties were identified – such agreements are usually concluded between a company and its subsidiaries on non-market terms. Hindenburg Research also accused Supermicro of violating the sanctions regime. After this, the company’s shares fell in price by more than 20%.
Image source: Supermicro
Complaint No. 24-cv-06147, as well as the later complaint Menditto v. Super Micro Computer (No. 24-cv-06149; Northern District of California), accuses Supermicro of making false and/or misleading statements and concealing certain information. The company is charged, among other things, with:
- Regular overestimation of sales volumes and underestimation of expenses;
- Rehiring several executives who were fired due to a previous accounting scandal;
- Close relationships with its related parties;
- Sales of products to customers subject to American sanctions due to the current geopolitical situation.
It is noted that on August 28, 2024, Supermicro announced a delay in filing Form 10-K for fiscal year 2024, stating that “management needs additional time to complete an assessment of the status and effectiveness of its internal controls over financial reporting.”