In the Matter of Super Micro Computer, Inc. Admin. Proc. File No. 3-19927 In the Matter of Howard Hideshima Admin. Proc. File No. 3-19928
Oct. 12, 2022
On August 25, 2020, the Commission separately instituted and simultaneously settled related cease-and-desist proceedings (the “Orders”) against Super Micro Computer, Inc. (“SMC”) and Howard Hideshima (“Hideshima”), its Chief Financial Officer (“CFO”) (collectively, the “Respondents”). In the Orders, the Commission found that the Respondents violated federal securities laws by engaging in improper accounting—prematurely recognizing revenue and understating expenses from at least fiscal year (“FY”) 2015 through FY 2017. As a result, SMC filed with the Commission materially misstated financial statements in its annual, quarterly and current reports during that period, which Hideshima signed and/or approved.
SMC was ordered to pay a civil money penalty of $17,500,000.00, and Hideshima was ordered to pay disgorgement of $260,844.00, prejudgment interest of $40,212.00, and a civil money penalty of $50,000.00. The funds were ordered to be combined into a Fair Fund created pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the collected civil money penalty can be distributed along with collected disgorgement and prejudgment interest, to those harmed by the Respondents’ conduct described in the Orders (the “Fair Fund”). See the Commission’s Orders: Release Nos. 33-10822 and 34-89657.
The Respondents have paid in full. The Fair Fund, comprised of the $17,851.056.00 paid by the Respondents, has been deposited in an interest-bearing account at the U.S. Treasury. All interest earned will accrue for the benefit of, and be added to, the Fair Fund.
On November 6, 2020, the Commission issued an order appointing Miller Kaplan Arase LLP, as the Tax Administrator of the Fair Fund. See the Commission’s Order: 34-90373.
On December 22, 2020, the Commission issued an order appointing Kurtzman Carson Consultants, LLC (“KCC”), as the Fund Administrator to oversee the administration and distribution of the Fair Fund and set the administrator’s bond amount. See the Commission’s Order: Release No. 34-90784.
On February 3, 2021, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-91046 and the Proposed Plan.
The Proposed Plan proposes to distribute the Net Available Fair Fund, comprised of the $17,851,056.00 paid by SMC and Hideshima pursuant to the Orders, plus accrued interest, less amounts expended or reserved for Administrative Costs, to investors who purchased the Security during the Relevant Period and suffered an Eligible Loss Amount as calculated under the Methodology used in the Plan of Allocation.
On April 8, 2021, the Commission issued an order approving the Proposed Plan and simultaneously posted the approved plan of distribution (the “Plan”). See the Commission’s Order: Release No. 34-91507 and the Plan.
On February 7, 2022, the Commission issued an order amending paragraph 45 of the Plan to correct the Market Loss Limitation provision to ensure that the methodology as approved in the Plan is properly applied (the “Amended Plan”). See the Commission’s Order: Release No. 34-94170 and the approved Amended Plan of Distribution.
On September 22, 2023, the Commission issued an order approving the disbursement of $17,593,975.87 from the Fair Fund for distribution by the Fund Administrator in accordance with the Plan. See the Commission’s Order: Release No. 34-98487.
For more information, please contact the Commission:
Office of Distributions