SUPER MICRO COMPUTER, INC. CLASS ACTION NOTICE: BFA Law has Filed an Expanded Securities Fraud Class Action Lawsuit Against Super Micro Computer, Inc. (NASDAQ:SMCI), Encourages Investors to Contact the Firm
NEW YORK, NEW YORK / ACCESSWIRE / October 18, 2024 / Bleichmar Fonti & Auld LLP ("BFA") announces that it has filed a class action lawsuit for violations of the federal securities laws on behalf of its clients Covey Financial Inc., Pembroke Capital Ltd. Corp., and Soverel, Inc. against Super Micro Computer, Inc. ("SMCI" or the "Company") and certain of the Company's senior executives. The case is pending in the U.S. District Court for the Northern District of California and is captioned Covey Financial Inc. v. Super Micro Computer, Inc., No. 24-cv-07274 ("Covey").
Covey is related to the following four class actions that investors previously filed against SMCI: (1) Averza v. Super Micro Computer, Inc., No. 5:24-cv-06147 (N.D. Cal. Aug. 30, 2024); (2) Menditto v. Super Micro Computer, Inc., No. 3:24-cv-06149 (N.D. Cal. Aug. 30, 2024); (3) Spatz v. Super Micro Computer, Inc., No. 5:24-cv-06193 (N.D. Cal. Aug. 30, 2024); and (4) Norfolk County Retirement System v. Super Micro Computer, Inc., No. 4:24-cv-06980 (N.D. Cal. Oct. 4, 2024) (the "Prior Actions").
The Prior Actions assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of all those that purchased or acquired SMCI securities. Covey asserts the same claims on behalf of all those that purchased or acquired SMCI securities, and also specifically asserts claims on behalf of those that sold put options on SMCI stock. Additionally, the Prior Actions allege that SMCI's alleged misconduct was first revealed to investors on August 27, 2024. Covey alleges that SMCI's alleged misconduct was first revealed on August 6, 2024, as described below.
Pursuant to the notices published on August 30, 2024 as required by the Private Securities Litigation Reform Act of 1995, investors wishing to serve as Lead Plaintiff in these related securities actions are required to file a motion for appointment as Lead Plaintiff by no later than October 29, 2024. The filing of Covey does not alter that deadline.
If you suffered a loss on your SMCI investments and would like to discuss this matter, please submit your information at https://www.bfalaw.com/cases-investigations/super-micro-computer-inc.
Why was SMCI Sued for Securities Fraud?
Covey alleges that SMCI is a San Jose, California based manufacturer of server and storage solutions which sells its hardware to technology companies for use in servers supporting websites, data storage, and artificial intelligence applications.
During the Class Period of February 2, 2021, through September 25, 2024, inclusive, Defendants assured investors that SMCI's financial statements were prepared in accordance with GAAP and certified that the Company's internal controls over financial reporting were effective. Defendants also asserted that SMCI's robust gross margins were sustainable and driven by legitimate business factors. And Defendants repeatedly affirmed that SMCI did not sell its products in Russia during fiscal years 2023 and 2024 in purported compliance with relevant trade control regulations.
In truth, when these statements were made: (i) SMCI's reported revenues, earnings, gross margins, and other financial figures were materially misstated in violation of GAAP; (ii) SMCI's internal controls over financial reporting were ineffective; (iii) SMCI's gross margins were driven by a scheme whereby the Company would deliver unfinished or defective products to customers; (iv) SMCI concealed from investors information about related parties and related party transactions; and (v) SMCI was not in compliance with trade control regulations restricting exports to Russia.
The Stock Declines as the Truth is Revealed
As Covey alleges, on August 6, 2024, SMCI issued a press release announcing its fourth quarter and full year fiscal 2024 financial results and revealed a significant decline in its gross margin. The Company attributed the lower gross margin to increased production costs that could no longer be passed on to customers. On this news, the price of SMCI stock declined over 20%, from $616.94 per share on August 6, 2024, to $492.70 per share on August 7, 2024.
Three weeks later, on August 27, 2024, prominent investment research firm Hindenburg Research ("Hindenburg") published a report that provided evidence of SMCI's "glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues." The Hindenburg Report further described how SMCI engaged in a fraudulent revenue recognition scheme by prematurely recording revenue for equipment that could not be delivered or installed and booking revenue for faulty or incomplete products not ready for sale. As a result, according to Hindenburg, SMCI's "gross margins have started to collapse," as reflected on August 6, 2024. In response to the Hindenburg Report, SMCI's stock price declined approximately 3%, from $562.51 per share on August 26, 2024, to $547.64 per share on August 27, 2024.
The next day, August 28, 2024, SMCI announced that it would "not timely file its Annual Report on Form 10-K for the fiscal year ended June 30, 2024" because "[a]dditional time is needed for SMCI's management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting." This news caused the price of SMCI stock to decline more than 19%, from $547.64 per share on August 27, 2024, to $443.49 per share on August 28, 2024.
Finally, on September 26, 2024, The Wall Street Journal reported that the United States Department of Justice had initiated an investigation into the Company. On this news, the price of SMCI stock declined more than 12%, from $458.15 per share on September 25, 2024, to $402.40 per share on September 26, 2024.
What are my Rights?
If you purchased or acquired SMCI securities or sold put options on SMCI stock between February 2, 2021 and September 25, 2024, you may ask the Court no later than October 29, 2024, which is the first business day after 60 days from the date of the publication of the notice of the pendency of the first-filed action, to appoint you as Lead Plaintiff through counsel of your choice. To be a member of the Class, you need not take any action at this time. The ability to share in any potential future recovery is not dependent on serving as Lead Plaintiff.
If you incurred losses on your investments in SMCI, you are encouraged to submit your information here: https://www.bfalaw.com/cases-investigations/super-micro-computer-inc.
You can also contact:
Ross Shikowitzross@bfalaw.com212-789-3619
Why BFA Law?
Bleichmar Fonti & Auld LLP is a leading international law firm representing plaintiffs in securities class actions and shareholder litigation. It was named among the Top 5 plaintiff law firms by ISS SCAS in 2023 and its attorneys have been named Titans of the Plaintiffs' Bar by Law360 and SuperLawyers by Thompson Reuters. Among its recent notable successes, BFA recovered over $900 million in value from Tesla, Inc.'s Board of Directors (pending court approval), as well as $420 million from Teva Pharmaceutical Ind. Ltd.
SOURCE: Bleichmar Fonti & Auld LLP
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