WASHINGTON — The U.S. Securities and Exchange Commission said on Tuesday that it has charged a computer server producer, Super Micro Computer, Inc and a former chief officer with prematurely recognizing revenue and understating expenses.
The San Jose, California-based company and the former CFO , Howard Hideshima, “pushed employees to maximize end-of-quarter revenue, yet failed to devise and maintain sufficient internal accounting controls to accurately record revenue,” the SEC order said. The agency said that resulted in the company’s “improperly” and “prematurely” reporting of revenue, including “on goods sent to warehouses but not yet delivered to customers, shipping goods to customers prior to customer authorization, and shipping misassembled goods to customers.”
Super Micro did not admit or deny the SEC’s charges, the agency said in its order. The company has agreed to pay a $17.5 million penalty while Hideshima has agreed to pay disgorgement and prejudgment interest totaling more than $300,000, and a $50,000 penalty.
Super Micro’s chief executive, Charles Liang, while not charged with misconduct, is required to reimburse the company $2.1 million in stock profits that he received while the accounting errors were occurring, the SEC said.
“Reporting revenue in the wrong period gives investors a distorted view of a company’s financial condition” said Melissa Hodgman, an SEC enforcement official. “The SEC will continue to hold executives accountable when they exploit insufficient internal controls.”
(Reporting by Katanga Johnson; Editing by Sandra Maler and Jonathan Oatis)