Shares of Super Micro Computer Inc. dropped more than 12% today after the Wall Street Journal reported that the company is facing a probe from the U.S. Justice Department.

The report didn’t specify the nature of the investigation. However, the Journal’s sources did detail that a prosecutor has asked for information seemingly “connected to a former employee who accused the company of accounting violations.” A few months after the employee made those accusations, a short seller flagged similar concerns about Supermicro’s finances. 

Supermicro is a major supplier of the specialized servers in which cloud operators place their graphics cards. Each of the company’s machines can be equipped with up to 10 Nvidia Corp. chips. The servers include up to several terabytes of memory, flash drives that can be replaced without incurring downtime and other components.

Alongside artificial intelligence hardware, Supermicro sells servers for a range of other use cases. Some systems are geared towards general-purpose workloads. The company also makes more specialized machines, such as so-called twin servers that combine two computers in a single chassis.

Supermicro is likewise a major player in the upstream server component market. The company has been selling motherboards, the parts that link together a computer’s core components, for more than three decades. Supermicro makes over 500 kinds of motherboards for not only servers but also connected devices and workstations.

Last month, Hindenburg Research claimed to have found “glaring accounting red flags” in Supermicro’s finances. The short seller said that it had discovered undisclosed related party transactions, which are deals between closely associated parties such as a company and its subsidiaries. Hindenburg also claims to have identified other issues including failures to comply with export controls. 

A few months earlier, a onetime general manager at Supermicro’s professional services group filed a lawsuit against the company. The former executive accused the hardware maker of improperly recognizing revenue between 2020 and 2022. According to the lawsuit, Supermicro booked revenue on transactions that hadn’t been completed or involved the sale of partly constructed hardware.

The former executive’s lawsuit is reportedly not the only focus of the Justice Department probe into Supermicro. According to the Journal, a prosecutor at the U.S. attorney’s office in San Francisco has contacted several individuals “potentially holding relevant information” about the company. The report didn’t elaborate.

Shortly after Hindenburg Research published its claims of accounting irregularities last month, Supermicro announced plans to delay the filing of its annual 10-K financial performance report. The hardware maker’s board also formed a committee to “review certain of the company’s internal controls and other matters.”

Supermicro has not revised the numbers in its most recent quarterly earnings report, which was published three weeks before the Hindenburg Research claims. In a Sept. 3 letter to customers cited by the Journal today, the company stated that the short seller made “false or inaccurate statements about our company.” Supermicro’s memo added that “we will address these statements in due course.” 

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