Shares of SMCI jump 20% after the company says it won’t restate financials

Shares of Super Micro Computer (NASDAQ: SMCI) jumped 20% in the premarket following a company announcement that an independent special committee found no evidence of misconduct by management or the Board of Directors.

• Special Committee, backed by Cooley LLP and forensic accountants Secretariat Advisors, completed their review with no evidence of wrongdoing found
• No restatement of financial reports will be necessary, validating the accuracy of previously reported financial statements
• Company strengthens leadership team with appointment of new Chief Accounting Officer and plans for CFO transition

I don’t know how credible Cooley LLP and forensic accountants at Secretariat Advisors are but they’re staking their reputations on this and the company is highly shorted so this could be a heckuva squeeze.

Cooley has worked with Qualcomm and Google on major cases, they’re not some backwoods firm. Secretariat Advisors isn’t as well known but this comes after Ernst & Young resigned as the company’s auditor due to concerns about governance and the reliability of management’s representations.

Here is the company statement:

On November 5, 2024, the Company announced that the Special Committee’s investigation preliminarily found that the Audit Committee had acted independently and that there was no evidence of fraud or misconduct on the part of management or the Board of Directors.

The Special Committee’s final findings support those initial findings, and the Company is now disclosing the details of the Review, along with measures recommended by the Special Committee.

The Special Committee’s investigation was intended to assess whether the information brought to the Audit Committee’s attention by EY, and certain other matters identified during the Review, raised substantial concerns about (i) the integrity of the Company’s senior management and Audit Committee, (ii) the commitment of the Company’s senior management and Audit Committee to ensuring that the Company’s financial statements are materially accurate, (iii) the Audit Committee’s independence and ability to provide proper oversight over matters relating to financial reporting, and (iv) the tone at the top of the Company with regard to rehiring certain former employees and financial reporting.

The Special Committee’s key findings are summarized as follows:

• Management and Audit Committee integrity: The evidence reviewed by the Special Committee did not raise any substantial concerns about the integrity of Supermicro’s senior management or Audit Committee, or their commitment to ensuring that the Company’s financial statements are materially accurate.

• Audit Committee independence: As to the matters investigated by the Special Committee, the Audit Committee demonstrated appropriate independence and generally provided proper oversight over matters relating to financial reporting. The Special Committee also had no reservations about the independence of the Audit Committee and each of its members.

• Appropriate tone at the top: With respect to the rehiring of former employees, the tone at the top of the Company was appropriate and fully consistent with a commitment to proper financial reporting and legal compliance.

This article was written by Adam Button at www.forexlive.com.