Whistleblower Alleges Accounting Improprieties at Super Micro Computer
A former strategy director at Super Micro Computer, Bob K. Luong, is pushing forward with allegations that the company retaliated against him and ultimately fired him for reporting what he believed to be accounting irregularities and Securities and Exchange Commission (SEC) violations.
Luong’s Claims
Luong’s lawyers filed a motion to lift a previous stay, allowing an amended whistleblower complaint against Super Micro and its CEO, Charles Liang, to be filed and potentially proceed in federal court. Luong alleges that the company improperly recognized millions in revenue before delivering goods to customers and shipped equipment with missing parts to inflate its financial performance. He also claims that the CEO’s wife and co-founder, Sara Liu Liang, and her brother Edmond Liu, negotiated with the CEO of business partner Compuware to delay payments and adjust terms of sale, enabling early revenue recognition.
Luong’s Struggle
Luong says he repeatedly tried to get the company to investigate its accounting practices and certain employees before finally filing an internal complaint in March 2022. He claims he was brushed off, placed on unpaid leave, and eventually fired in April 2023. Super Micro has denied Luong’s allegations and declined to comment.
Super Micro’s Defense
According to court documents, Super Micro alleges that Luong engaged in abusive bullying of two direct reports in July 2022. The company claims Luong refused to participate in its investigation, leading to his administrative leave. Super Micro says its investigation found evidence of Luong’s mistreatment of employees, including yelling, cursing, and rude behavior. The company also claims Luong was frequently absent from work and skipped meetings.
Luong’s Attorney Responds
Luong’s attorney, Tanya Gomerman, argues that the company fired Luong for not cooperating in an investigation into a subordinate, but what Luong requested was for the chief financial officer to be present during his interview. Gomerman says Luong was targeted for speaking up about alleged illegal activities.
Super Micro’s History
Luong had worked at Super Micro since 2012 and owned stock that plummeted when the company was delisted by Nasdaq in 2018 due to an SEC investigation into its revenue recognition practices. The company settled with the SEC, paying a $17.5 million fine, and was relisted in 2020. Its stock price has since surged 3,000%, and it now does business with AI leader Nvidia.
Recent Challenges
Super Micro has faced accusations of improper accounting for months, including a short-seller report from Hindenburg Research in August. Its former accounting firm, Ernst & Young, resigned mid-audit, citing concerns about the management team and board’s independent audit committee. Super Micro later hired BDO as its new auditor.
Special Committee Review
On Monday, Super Micro announced that a special board committee, led by director Susie Giordano, had completed its review and determined that EY’s resignation and conclusions were not supported by the committee’s findings. Giordano worked with law firm Cooley LLP and a forensic accounting team from Secretariat Advisors, analyzing 9 million documents and conducting 68 witness interviews. The committee found “lapses” in ensuring guardrails were in place, including a consulting agreement with the company’s former CFO, which has since been terminated. Super Micro is hiring new executives, including a CFO, chief accounting officer, and chief compliance officer.
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