Super Micro finds no evidence of fraud. Replace CFO
Super Microcomputer Inc. said an independent review of its business found no evidence of fraud, but recommended that server manufacturers appoint new top financial and legal leadership.
A review by the Special Board Committee, along with Cooley LLP and the Secretariat Advisors of the Forensic Division, found that “there was no evidence of management or board misconduct and that the Audit Committee acted independently.”
As a result of the findings, the committee recommended that Super Micro set up a new Chief Financial Officer, Chief Compliance Officer and General Counsel, said in a statement Monday. “The board has directed us to add experienced and senior talent to the size and complexity of the company today and manage it to prepare for future growth,” Super Micro said in a statement.
Stocks jumped 22.5% on Monday in New York.
Super Micro said it does not expect changes to financial results previously issued in the most recent fiscal year. Kenneth Chung, former vice president of finance, will become the company’s new chief accounting officer. The company has then launched a process of searching for a new CFO to replace David Weigand.
It was a turbulent year for ultra micro. The manufacturer of powerful servers has missed the August deadline to file its annual financial report and auditor Ernst & Young LLP.ResignationIn October, he cited concerns about the company’s governance and transparency. The company is also facing the US Department of JusticeprobeFollowing a damages report from the short seller Hindenburg study.
ey In July, I spoke to Super Micro’s Audit Committee. In response, the board examined revenue recognition practices, export control policies, rehiring of employees who resigned after previous accounting issues, and disclosures of related party transactions. The investigation found that “the conclusions expressed in the letter of resignation are not supported by the facts considered in the review.”
November, Super MicroAppointmentI submitted plans to enter compliance with BDO USA as an independent auditor Nasdaq Listing requirements. Bloomberg Intelligence analyst Woo Jin Ho clears the major hurdles to filing audited finances by completing an internal investigation.
When examining the reemployment of nine individuals who resigned from the company following a 2017 investigation, the special committee found that the reemployment decision was “a product of a reasonable business decision.”
Still, the Special Committee lapsed “to ensure that the guardrails were always in place and observed.” This includes not notifying EY before signing a consulting arrangement with the former CFO of Super Micro, who resigned after the 2017 investigation. That arrangement was then finished.
The committee holds “primary responsibility” for these lapses by Chief Financial Officer David Weigand. He will continue to serve as the company’s CFO until the board is appointed as his successor, Super Micro said. The committee found “there is no evidence that the process course is attributable to malicious intent, inappropriate motives, or lack of respect for accurate financial reporting or compliance.”
In 2020, Super Micro paid $17.5 million to resolve the Securities and Exchange Commission investigation into financial accounting and disclosures for 2014-2017. SuperMicro did not grant or deny the regulator’s claim as part of the settlement.
In addition to new financial and legal leadership appointments, the company will improve training related to sales and revenue recognition policies. The investigation included an analysis of over 9 million documents and 68 witness interviews, Super Micro said. It also included “large meetings.” Deloitte & Touche LLP and EY, EY, former auditor.
This story was originally introduced Fortune.com