Financial news sites were ablaze recently with the news that a co-founder and board member of the data server company Super Micro Computer had been indicted, along with two other company executives, for allegedly conspiring to smuggle high-end Nvidia chips into China, in violation of U.S. export control laws. With news that sensational, and in light of the ensuing stock price drop, it was only a matter of time before plaintiffs’ lawyers would file a securities class action lawsuit. And, sure enough, late last week, a plaintiff shareholder did file a securities suit against the company.

The complaint in the new lawsuit, which can be found here, is interesting in and of itself, relating as it does to the sensational circumstances involved. But the lawsuit is arguably even more interesting for what it represents – that is, as an illustration of the ways that geopolitical issues can – and increasingly are – translating into securities class action lawsuits.

Background

Super Micro Computer designs, develops, and manufactures data server and storage systems. The company’s flagship products are servers that integrate Nvidia Corporation’s graphics processing units (GPUs) and are subject to strict U.S. export controls barring their sale to China without a license.

On March 19, 2026, the U.S. Department of Justice announced the unsealing of an indictment  against three Super Micro executives – including company senior VP, board member, and co-founder Yih-Shyan “Wally” Liaw – of “conspiring to divert high-performance servers assembled in the United States and integrating sophisticated U.S. artificial intelligence technology to China, in violation of U.S. export control laws.”

The DOJ’s press release quotes the U.S. Assistant Attorney General for National Security, John Eisenberg, as saying “The indictment unsealed today details alleged efforts to evade U.S. export laws through false documents, staged dummy servers to mislead investigators, and convoluted transshipment scheme, in order to obfuscate the true destination of restricted AI technology – China.”

Super Micro, which was not named as a defendant in the indictment, said that upon learning of the indictment, the company had placed Liuw on leave. The next day, Liuw resigned from the company’s board.

According to the complaint, Super Micro’s stock price declined over 33% on the news of the indictment.

The Lawsuit

On March 25, 2026, a plaintiff shareholder filed a securities class action lawsuit in the Northern District of California against Super Micro and two of its executives (neither of whom were named as defendants in the criminal indictment). The complaint purports to be filed on behalf of investors who purchased the company’s shares between April 20, 2024, and March 19, 2026.

The complaint alleges that during the class period the defendants failed to disclose to investors that: “(1) a significant portion of the Company’s sales of servers were to companies based in China; (2) these transactions violated U.S. export control laws; (3) there were material weaknesses in the Company’s controls to ensure compliance with applicable export control laws and regulations; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the class.

Discussion

As Sarah Abrams noted in a recent post on this site (here), in the current political environment, geopolitics represents an increasingly important component of D&O risk.

Among other things, as I have detailed in previous posts on this site (for example, here), the current Trump administration’s tariff policies have not only had a significant impact on the U.S. trade and the global economy, but have also translated into a series of recent D&O claims.

Other geopolitical sources of D&O stress also pertain to global trade issues, particularly export controls and trade sanctions. In many instances, stresses involving these trade issues have translated directly into D&O claims, as this new lawsuit against Super Micro shows. Indeed, securities class action lawsuit filings arising export control issues are, in fact, nothing new.

For example, as I noted here, in March 2020, a U.S. semiconductor company was hit with a securities class action lawsuit after disclosing that it was under investigation from the U.S. Department of Justice regarding the company’s compliance with export controls relating to business transactions with the Chinese technology company Huawei.

Similarly, in 2015, the software firm Vasco Data Security was sued in a securities class action lawsuit after the company disclosed that it had self-reported a possible violation of federal prohibitions against sales of goods to parties in Iran, as discussed here.

Interestingly, among the claims in the list of prior securities suits involving export control issues is a securities suit filed in October 2024 against none other than Super Micro Computers. The lawsuit, which drew heavily on a short seller report, contained a number of allegations, including the assertion that the company had misrepresented its compliance with trade control regulations restricting exports to Russia, as I discussed in a blog post at the time the suit was filed. That case remains pending in the Northern District of California. The court heard oral argument on the defendants’ motion to dismiss on March 12, 2026.

It should be emphasized that tariff concerns and export control issues are not the only geopolitical factors contributing to D&O risk. Other areas of geopolitical concern include money laundering laws, trade sanctions, and anti-bribery and corruption laws.

A recent example of a securities suit arising out of trade sanction-related issues is the December 2024 lawsuit filed against the U.S.-listed Kazakhstan banking corporation Kaspi.kz,  in which the plaintiff alleged that the company had misrepresented the extent to which its bank subsidiary was being used for unlawful purposes, including assisting Russians to evade sanctions imposed in the wake of the 2022 invasion of Russia. The lawsuit is discussed in detail here.

In an example of a shareholder derivative lawsuit arising out of trade sanction-related issues, as discussed here, a shareholder of J.P. Morgan Chase filed a derivative lawsuit against the company, as nominal defendant, and certain of its directors and officers alleging breaches of fiduciary duty in connection with the company’s $88.3 settlement with the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC).

And in an example of the ways in which alleged money laundering law (AML) violations can translate into securities litigation, in January 2025, as discussed here, a plaintiff shareholder filed a securities suit against the money transfer firm Block based on allegations that the company’s failure to maintain basic AML protocols had created a “haven for criminal and illicit activities,” allegedly contrary to the company’s representations.

Geopolitical Issues Seem Likely to Become Increasingly Important This Year: Under the current conditions, the influence of geopolitical factors on D&O risk is only likely to increase — among other things, because of the war in Iran. The Iran war has not only disrupted the global flow of oil, gas, and diesel fuel, it threatens the global food supply; it has snarled global supply chains; it is driving up shipping costs; and it is boosting prices for a wide range of goods and products, including fertilizer, helium, cotton, and aluminum, among many other things. All of these things are likely to drive economic inflation.

In other words, it seems likely that in the weeks and months ahead that geopolitical concerns are likely to have an enormous impact on economies and businesses alike. I expect that as the year progresses we will have many more occasions on this blog to write about geopolitical issues

A Final Note About This Lawsuit Filing: One final note about this new lawsuit against Super Micro is that qualifies as an AI-related securities suit. Indeed, in its press release to which I linked above, the DOJ went out of its way to emphasize that the technology at issue in the indictment is critically important precisely because it relates to artificial intelligence. The agency emphasized that the smuggled servers contained “artificial intelligence technology,” and also highlighted that the purpose of the indictment was to “bring justice to bad actors who aim to profit from illegally exporting U.S. artificial intelligence technology.” As far as the DOJ was concerned, the fact that the trade control violation related to sensitive AI technology was at the crux of the seriousness of the alleged criminal violation.

So for that reason I have no difficulty categorizing this new lawsuit as AI-related, making this case the seventh AI-related securities suit filed this year, and suggesting that as the year progresses AI-related securities suits will represent a significant part of the year’s overall securities suit filings.

The Backstory on the Super Micro Allegations: As interesting as I think these larger geopolitical issues are, it is also undeniably true that the underlying allegations in the criminal indictment are also quite interesting. If you have a few minutes, I highly recommend taking the time to read the DOJ press release, which describes in detail how the defendants allegedly managed the scheme to smuggle the prohibited technology into China. The alleged scheme was quite involved, including dummy servers, false labelling, encrypted messages, and the unlicensed movement of goods.

There is an interesting backstory to these allegations, including, among other things, the prior allegations noted above that the company supposedly had previously misrepresented its compliance with trade controls on the shipment of prohibited items to Russia.

However, there apparently is even more to the backstory than that. As Jonathan Weil detailed in a March 20, 2026 Heard on the Street column in the Wall Street Journal (here), Liaw’s recent resignation as a director of Micro Computer was in fact not the first time he had been forced to resign from the company. As Weil details in his column, Liaw previously resigned from the company in 2018, along with the company’s finance chief, after an investigation by the company’s audit committee led the company to restate its financial results. Super Micro paid $17.5 million in 2020 to settle SEC allegations of widespread accounting violations.

Weil reports that Liaw returned to Super Micro as a consultant in 2021, then as senior vice president in 2022, and was re-appointed to the board in late 2023. The short seller report that was the basis of the 2024 lawsuit against the company (involving the Russian trade control violation allegations) included in its litany of concern with the company that Liaw had been rehired notwithstanding the 2018 accounting mess.