Shares of Super Micro Computer Inc. (SMCI), a leading provider of high-performance server solutions, plummeted by over 30% in pre-market trading on Wednesday, October 30th, 2024. The sharp decline came after the company's auditor, Ernst & Young (EY), abruptly resigned, citing concerns over governance, transparency, and the ability to rely on representations from Super Micro's management and audit committee.
In a letter to Super Micro's audit committee dated October 24th, EY stated that it was 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 auditor's resignation has raised serious questions about the integrity of Super Micro's financial reporting and accounting practices. EY had previously expressed concerns about governance, transparency of communications, and internal controls over financial reporting. In response, Super Micro had appointed a special committee in late July to review these matters, engaging external legal and forensic accounting advisors.
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