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Campaign finance complaint from Rep. Stevens on Mayors McFarland & Reed reset to May 28

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Campaign finance complaint from Rep. Stevens on Mayors McFarland & Reed reset to May 28


The Tennessee Registry of Election Finance rescheduled agenda issue

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  • State Rep. Robert Stevens sent letter to Registry of Election Finance prior to March 5 referendum asking Smyrna voters if town should eliminate General Sessions Court presided over by his sister
  • Mayor Reed accuses Rep. Stevens of pursing ‘personal vendetta’
  • Mayor McFarland says his construction business partner pursued rezoning for Smyrna development before donation
  • Mayor Reed backs McFarland’s account of development

The Murfreesboro and Smyrna mayors and a Political Action Committee will have more time to respond to a campaign finance audit and investigation request from state Rep. Robert Stevens.

The Republican lawmaker from Smyrna asked the Tennessee Registry of Election Finance in a Jan. 25 letter to examine three campaign finance accounts. The main issue pertains to a $7,500 donation from Murfreesboro Mayor Shane McFarland in November 2022 to Tennesseans For Greater Accountability, the Political Action Committee. The PAC soon donated $7,500 to the campaign account of Smyrna Mayor Mary Esther Reed, Stevens wrote in his letter Registry.

The Registry had been scheduled to discuss the request from Stevens on March 26, but Chairman Henry “Hank” Fincher with consent of his board decided to give the mayors and PAC representative Richard Cole more time to provide written responses to the lawmaker’s letter, said Bill Young, the executive director for the Registry.

The issue will be part of the Registry agenda for the 9:30 a.m. May 28 meeting at Tennessee Tower in downtown Nashville. The Stevens’ letter had suggested the $7,500 donations, from McFarland to the PAC and from the PAC to Reed, occurred “on the exact same day” on Nov. 23, 2022.

Campaign finance issue: Mayors of Murfreesboro, Smyrna face audit, investigation request by state Rep. Stevens

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The PAC since then amended online records on March 14 to show that McFarland made his $7,500 donation on Nov. 15, 2022, followed by the PAC making a $7,500 donation to Reed’s campaign on Nov. 22, 2022. The Daily News Journal sent an email at 4:06 p.m. Tuesday to Cole, the PAC representative, but he was unavailable for comment.

The PAC, which lists a Murfreesboro P.O. Box for its address, also made campaign donations on Nov. 22, 2022, of $2,000 each to Smyrna Vice Mayor Marc Adkins and fellow Town Council members H.G. Cole and Gerry Short. The ending fund balance of the PAC after the donations was just over $743, according to the amended fourth quarter report for 2022.

Stevens, who’s also an attorney, sent his letter to the Registry prior to Smyrna voters considering a referendum March 5 supported by Mayor Reed on whether to eliminate a town General Sessions Court. The lawmaker’s sister, Judge Brittany Stevens, presides over the court that handles criminal cases after winning her eight-year term August 2022 when he won the GOP primary for his Tennessee House of Representatives seat.

Over 71% of Smyrna voters opposed the plan to transfer the criminal cases to General Sessions Courts based at the Rutherford County Judicial Center in downtown Murfreesboro.

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Both mayors had suggested the motive of Rep. Stevens in requesting the investigations and audits was in response to Smyrna officials attempting to eliminate his sister’s General Sessions Court.

‘Citizens should be involved’: Smyrna officials divided over General Sessions Court status

Mayor Reed accuses Rep. Stevens of pursing ‘personal vendetta’

Mayor Reed responded Tuesday by emailing the following statement to The Daily News Journal:

“In 2022, I received a legal donation from a political action committee under the maximum contribution level. State Representative Robert Stevens created controversy over this donation because of the debate Smyrna had over continuing a General Sessions Court presided over by his sister, the Smyrna town judge. If voters had supported the March 5 Smyrna Referendum, his sister would not have been guaranteed another term as judge beyond 2030.

“I believe Representative Stevens is trying to use his position as state representative to weaponize a state agency against me and others because of a personal vendetta. The complaint he filed was based on inaccurate information. The record is available for all to see, and it shows that everything was done in compliance with election law.”

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‘The people have clearly spoken’: Smyrna voters reject referendum to eliminate court

Mayor McFarland says his construction business partner pursued rezoning for Smyrna development before donation

The donation in question from McFarland came a couple of months after his longtime business partner Steven Dotson with DM Homes LLC won rezoning approval for a townhome project on nearly 7.4 acres from unanimous Smyrna Town Council votes that includes Mayor Reed during August and September meetings in 2022, the Murfreesboro mayor confirmed.

“I had nothing to do with the zoning,” said McFarland, adding that he avoids talking to elected officials, planning officials or city managers about any development project his construction businesses pursue. “Nobody even knew I was involved in that. I did not want to put any undue pressure on anyone.

“When construction starts, that’s when I step in.”

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Complaint on management: Smyrna Judge Brittany Stevens’ lawyer demands investigation of Town Manager Brian Hercules

Mayor Reed backs McFarland’s account of development

Mayor Reed’s statement also confirmed McFarland’s account of the townhouse project.

“Regarding the development in Smyrna, it is important to note that neither the Planning Commission, nor the Town Council were aware of Shane McFarland’s involvement with DM Homes during the planning process,” Reed said. “However, irrespective of this association, the project was given unanimous support during all phases of the approval process.”

The Smyrna Town Council learned details about the DH Homes LLC plan from Rob Molchan, a landscape architect with Murfreesboro-based SEC (Site Engineering Consultants). The project involved a Cedar Grove Village plan along Chaney Road to build 61 townhomes in Smyrna by the town’s boundary that’s south of the adjacent La Vergne High School, according to public records obtained through a request from The Daily News Journal.

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DM Homes LLC shares the same Murfreesboro address as Shane McFarland Construction. He and Dotson are also partners in Caroline Farms LLC, which is the owner of the rezoned Smyrna property, McFarland said.

Letter from Stevens questions also questions donations to McFarland

The letter from Stevens to the Registry also accused Mayor McFarland of violating the $1,600 limit on accepting campaign donations from individuals:

  • Five individual contributions, reported by McFarland in 2022 on June 16 and June 20, to the Murfreesboro mayor of $2,500 each, which exceeds the legally permissible maximum amount by $900.
  • Two individual contributions, reported by McFarland in 2022 on June 16 and June 21, to the Murfreesboro mayor of $2,000 each, which exceeds the legally permissible maximum amount by $400.

Mayor McFarland provided the previous statement about the Registry issue:

“It’s incumbent on elected officials to admit if we make mistakes, and I have made my fair share. I have always been upfront with anything I have ever done, and if I made or make a mistake, it will never be intentional, and I will own it and fix that mistake. This example is no different.”

Road planning issues: Murfreesboro mayor wants to avoid being ‘swallowed up by what Nashville’s doing’ on roads

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Reach reporter Scott Broden with news tips or questions by emailing him at sbroden@dnj.com. To support his work with The Daily News Journal, sign up for a digital subscription.

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Annual climate finance doubled between 2018 and 2022 but needs to increase at least fivefold to avoid worst consequences of climate change, study shows – CPI

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Annual climate finance doubled between 2018 and 2022 but needs to increase at least fivefold to avoid worst consequences of climate change, study shows – CPI

31 October 2024, London – Climate finance is going to be at the center of COP29 negotiations in Baku next month. A new study shows that annual climate finance must increase at least fivefold by 2030 to meet the goals of the Paris Agreement and to avoid the worst consequences of climate change.  

Read the report

The Global Landscape of Climate Finance 2024: Insights for COP29 report, published today by Climate Policy Initiative (CPI), found that climate finance flows reached almost USD 1.5 trillion, having doubled between 2018 and 2022.   

However, climate finance currently only represents 1% of global GDP, far short of what is needed. Emerging markets and developing economies (EMDEs) may need around 6.5% of their GDP by 2030 to meet climate goals.  

“While global climate finance has made some strides, a much more ambitious, cohesive, and effective approach is essential to address the vast funding gap,” said Barbara Buchner, CPI’s Global Managing Director. “The data from CPI’s Global Landscape report leaves no doubt that investment needs to scale across all fronts—domestically, internationally, and across sectors—to reach our mutual climate goals. COP29 is an opportunity to establish clear, collaborative commitments to finance the transformation needed for a sustainable future.” 

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CPI’s report further details the cost of inaction, estimating that projected economic losses by 2100 will be five times greater than the climate finance that is needed by 2050 to stay within a 1.5°C warming scenario. The economic impact under a “business-as-usual” scenario will be exponential if climate action is delayed, further exacerbating financial strain on all economies. 

Alarmingly, investments in fossil fuels continued to rise globally throughout 2023 and 2024 to surpass USD 1 trillion, despite global commitments to reduce fossil fuel investments. Subsidies for fossil fuel consumption in emerging economies increased fivefold during the same period.  

The insights provided in this year’s Global Landscape of Climate Finance 2024, the most comprehensive overview of global climate-related primary investment, are particularly crucial ahead of COP29, which marks a critical juncture for establishing the New Collective Quantified Goal (NCQG) to make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. 

Several large-scale processes need to occur simultaneously in the next five years to accelerate the scale, speed, and quality of climate finance amid constrained budgets and conflicting political and financial priorities. To enhance the scale and effectiveness of global climate finance, CPI proposes prioritizing the following topics: innovation and replication; targeting and allocation; domestic policies and ownership; and cross-cutting, multi-stakeholder action.  

For more information, register for the webinar on Monday, 4 November 2024.  

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Read the report

Media contact: 
Jana Stupperich 
Senior Communications Associate 
jana.stupperich@cpiglobal.org  

About Climate Policy Initiative
CPI is an analysis and advisory organization with deep expertise in finance and policy. Our mission is to help governments, businesses, and financial institutions drive economic growth while addressing climate change. CPI has offices in Brazil, India, Indonesia, South Africa, the United Kingdom, and the United States. 

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Inside Super Micro's wake-up call: After riding the AI wave, the $20 billion tech giant is crashing back to earth amid a financial crisis and family drama

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Inside Super Micro's wake-up call: After riding the AI wave, the  billion tech giant is crashing back to earth amid a financial crisis and family drama

Silicon Valley tech company Super Micro was supposed to be riding high: After flying under the radar for a quarter of a century, the company had ridden the coattails of the recent generative AI boom. The $20 billion manufacturer builds some of the most important hardware used to power the top artificial intelligence models–that is, high-performance servers that house the leading AI chips, including Nvidia’s.

Over the past five years, as the AI boom picked up steam before exploding post-ChatGPT, Super Micro’s shares soared over 3,000% and its reported revenue doubled to $7.12 billion, to earn it a glitzy debut on the Fortune 500. But accounting issues have continued to haunt the company: It settled with the Securities & Exchange Commission in August 2020 over two years’ worth of alleged accounting violations, and then in 2024 short-seller Hindenburg Research claimed Super Micro continued to engage in questionable accounting practices.

And now, things just got even more real. Super Micro’s auditor resigned in the midst of its work with the tech firm, a move generally considered to be one of the reddest of red flags in the financial and investment community. And after Super Micro broke that news to investors, auditor Ernst & Young came back with a World Series grand slam rebuttal. 

In a letter to the regulators, EY said it only agreed with the company’s disclosures in the first paragraph, the first sentence of the second paragraph, the third paragraph, the first three sentences of the fourth paragraph, and a few others. That’s it.

“We have no basis to agree or disagree with other statements of the registrant contained therein,” EY wrote to SEC commissioners. 

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For investors, those can be read as fighting words. Super Micro’s stock tumbled 33% on Wednesday.

Governance expert and Georgetown University associate professor Jason Schloetzer told Fortune this type of resignation is unusual and is consistent with a “noisy withdrawal.”

“It’s pretty clear there are irreconcilable differences between management and the auditor that are severe enough to spill into the public domain,” said Schloetzer. “An auditor resignation is already in red flag territory, so this one will certainly get close scrutiny from capital markets participants and regulatory agencies. Management will have some explaining to do.” 

What went down at Super Micro? 

The auditor’s response was prompted by the disclosure Super Micro made this week announcing EY’s departure. Critically, Super Micro told investors it “does not currently expect that resolution of any of the matters raised by EY, or under consideration by the Special Committee, as noted below, will result in any restatements of its quarterly reports for the fiscal year 2024 ending June 30, 2024, or for prior fiscal years.” Generally, Super Micro’s disclosure that they don’t think these concerns will prompt them to correct their financials is meant to soothe investors that are skittish about potential accounting problems. 

The company formed the special committee in question after EY flagged concerns about its financial reporting to the board’s audit committee last July. In response, the board formed a special committee to investigate—and hired law firm Cooley LLP and forensic accounting firm Secretariat Advisors to probe. As of today, that review remains ongoing, according to Super Micro.

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In a statement to Fortune, a Super Micro spokesman said it disagreed with EY and added it is working “diligently” to hire a new auditor. The spokesman emphasized that Super Micro does not believe it will need to issue any restatements or corrections to its financials. 

Accounting expert Francine McKenna told Fortune that the EY resignation went beyond the usual quiet exit auditors make when they slip away from an engagement. “There are noisy resignations and then there are resignations that bang a big giant gong—and this is as bad as it can get,” said McKenna, who authors The Dig newsletter.

In its resignation letter, EY wrote that it was no longer able to rely on management and the board’s audit committee, which is supposed to be made up of independent directors who oversee the company for the benefit of shareholders. “When you can’t rely on management, that’s bad,” said McKenna. “If you can’t trust the audit committee, there is something very wrong.”

A Super Micro spokesman told Fortune: “We have announced a first quarter business update call for Tuesday November 5th.” Not ideal timing, given that’s Election Day. Super Micro declined to comment further. 

Amy Lynch, former regulator with the SEC and Financial Industry Regulatory Authority, told Fortune it appears EY has “serious concerns about the company and contacted the SEC in order keep themselves from being charged in any subsequent enforcement action.”

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“SMCI may very soon find itself under investigation by the SEC for accounting-related fraud, if not already,” said Lynch, founder and president of FrontLine Compliance. “The SEC acts very quickly in these circumstances.”

The SEC did not immediately respond to a request for comment.

EY’s abrupt departure is the latest in a pileup of problems at a company considered a Wall Street darling not that long ago. Super Micro got a warning letter from Nasdaq last month after it failed to file its annual financial report on Aug. 29. The stock was still trading on the tech-heavy exchange, but the company was given a 60-day notice to either pony up a 10-K or submit a plan to regain compliance.

Super Micro got an extension until Nov. 27 to deliver on its fiscal year 2024 audited financial statements. The company also implemented a 10-for-1 forward stock split that took effect Sept. 30, increasing its authorized shares from 100 million to 1 billion. Stock splits are commonly used to make shares more affordable to investors because it lowers the price per share. Nvidia did a split this year also. It can also boost liquidity and flexibility in equity compensation. Super Micro CEO Charles Liang’s salary was revised in 2021 to just a dollar a year and all his comp was converted into performance-based stock options, according to the company, with potential value of $60 million. 

What’s up with the short report?

In August, famed short-seller Hindenburg Research hit the company with a 19,000-word short report. It claimed to have found “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures” after a three-month investigation. Super Micro described the report as “false and misleading” in a letter to investors. 

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That was after the SEC previously fined the company $17.5 million for alleged improper accounting from 2015 to 2017. Super Micro paid the fine without admitting or denying the findings. Former chief financial officer Howard Hideshima was also fined in the action—and cofounder and CEO Liang, while not charged with misconduct, had to repay the company $2.1 million in stock profits he received while the accounting errors were occurring—a compensation clawback.

It likely required a lot of heavy lifting from the audit committee. During 2018, the committee met 42 times, 38 of which were special meetings. In 2020, it met 15 times, with 11 special meetings. The grand total for the past three fiscal years is 47 audit committee meetings. On average, according to data from governance benchmarking analytics firm Esgauge, S&P 500 audit committees met about eight times a year for the past three years. 

Super Micro: A family affair

The company was founded in September 1993 by board chairman and CEO Liang and his wife, Sara Liu. A third cofounder, Yih-Shyan (Wally) Liaw was involved until January 2018 when he resigned all his positions as the company dealt with regulators following a previous audit committee investigation. But, as of May 2021, Liaw was back, advising Super Micro on development. He returned to full-time employment in August 2022 and rejoined the board in December 2023, according to the company’s most recent proxy report.

The company also involves multiple family relatives in its business entities, based on its disclosures. At least two sisters-in-law work at the company and a third loaned $12.9 million (plus interest) to Liang. The company’s most recent disclosure showed that he owed her $16 million. 

Cofounder Sara Liu’s brother, Hung-Fan (Albert), works for the company; Sara Liu’s sister-in-law, Shao Fen (Carly) Kao, works there; Sara Liu’s other sister-in-law, Mien-Hsia (Michelle) Hung, also works there.

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In October 2018, Liang personally borrowed the $12.9 million from Chien-Tsun Chang, the spouse of his brother Steve Liang (also Charles Liang’s sister-in-law). Charles needed it to pay back margin loans to two financial institutions that had been secured by Super Micro’s stock, the company’s disclosures state. The loans were called in after Nasdaq suspended the stock from trading on Aug. 23, 2018 after Super Micro failed to file multiple quarterly and annual reports with the SEC. It was delisted from the Nasdaq Global Select Market and quoted on the OTC Market. It was relisted on the exchange on Jan. 14, 2020.

From there, the disclosed inter-company transactions and business relationships get even more complex. Super Micro has entered into a series of agreements with a Taiwan corporation called Ablecom Technology and one of its affiliates, Compuware Technology, according to Super Micro’s financial filings. 

Super Micro outsources server design and manufacturing to Ablecom Technology. In fiscal 2023, Super Micro bought $167.8 million in products from Ablecom, and as of June 2023, Super Micro owed Ablecom $36.9 million. Super Micro also paid Ablecom $12.1 million for “design and tooling” in fiscal 2023, according to Super Micro.

There’s another family relationship in that mix. The CEO of Ablecom is Steve Liang, brother of Charles, per Super Micro’s financial disclosures. The complexity intensifies from there—according to Super Micro’s most recent proxy statement,  Steve Liang and his family own 28.8% of Ablecom. Charles Liang and his wife Sara Liu own 10.5% of Ablecom. Bill Liang (brother of Steve and Charles) is on Ablecom’s board and is CEO of the other entity involved, Compuware. (Neither Charles Liang nor Super Micro own stock in Compuware and Super Micro doesn’t own stock in Ablecom or Compuware. Ablecom owns less than 50% of Compuware, the company reported.) 

Furthermore, Ablecom’s sales to Super Micro make up a “substantial majority” of its net sales, the company disclosed. For the fiscal years ended June 30, 2023, 2022, and 2021, Super Micro bought products from Ablecom totaling $167.8 million, $192.4 million, and $122.2 million, respectively. During the same period, Super Micro owed Ablecom $36.9 million, $46.0 million and $41.2 million, respectively. Super Micro paid Ablecom $12.1 million, $8.3 million, and $8.6 million, respectively, for design services, tooling assets and miscellaneous costs, per the company filings. 

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Meanwhile, Compuware is a distributor for Super Micro in Taiwan, China, and Australia—and Super Micro outsources power design and manufacturing to Compuware. Compuware’s sales of Super Micro products to other businesses make up a majority of Compuware’s net sales. In fiscal 2023, Super Micro sold $36.3 million in products to Compuware and in June 2023, Compuware owed Super Micro $24.9 million. In fiscal 2023, Super Micro bought $217 million in products from Compuware, and in June 2023, Super Micro owed Compuware $66.2 million. Super Micro paid Compuware $2 million for “design and tooling.”

In addition, Super Micro and Ablecom jointly established Super Micro Asia Science and Technology Park in Taiwan “to manage shared common areas.” Each company contributed $200,000 for a 50% ownership stake in the venture, according to the company’s disclosures. 

Super Micro says its maximum financial exposure to Ablecom was $23.7 million in outstanding purchase orders as of June 30, 2023, and Super Micro’s maximum financial exposure to Compuware was $46.8 million in outstanding purchase orders as of June 30, 2023.

Super Micro also disclosed that a sibling of Yih-Shyan (Wally) Liaw, a board member and senior vice president of development, owns approximately 11.7% of Ablecom’s capital stock and 8.7% of Compuware’s capital stock.

For now, Super Micro’s spokesman said it will talk with investors on the Election Day call. But in a September letter to customers and business partners, Liang (the CEO and founder, not his siblings) emphasized the accounting delay that impacted its annual report and the Hindenburg issue wouldn’t impair its ability to deliver goods. 

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“Importantly, however, when we announced the decision to delay our Annual Report filing, we indicated that based on the work done so far, we don’t anticipate any material changes in our fourth quarter or fiscal year 2024 financial results,” wrote Liang. “This is good news. I continue to have strong confidence in our finance and internal teams.”

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Finance

OECD Review on Aligning Finance with Climate Goals

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OECD Review on Aligning Finance with Climate Goals

Aligning finance with climate policy goals is crucial for achieving net-zero greenhouse gas emissions and resilience to climate change, as called for by Article 2.1c of the Paris Agreement. Evidence-based policy making and investment decisions towards such alignment need to be informed by robust assessments. To support such efforts, this inaugural OECD Review on Aligning Finance with Climate Goals brings together best-available evidence on three core questions: (i) How is climate alignment of finance assessed? (ii) What do we know about current finance flows and stocks? (iii) What evidence exists on the role of financial sector policies and actions? The report identifies actions policymakers and financial sector stakeholders can take to improve the evidence base and better align finance with climate goals. It further sets out good practices to prevent greenwashing and inaccurate claims of climate alignment.

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