Equinix Escapes Enforcement from SEC Probe

Data center real estate investment trust Equinix is breathing a sigh of relief after a probe by the Securities and Exchange Commission ended without any action.

The company disclosed recently that the SEC concluded its investigation, Bisnow reported. Equinix stated that there will be no further action, such as a lawsuit, after the probe into alleged stock manipulation.

The investigation began after activist short-seller Hindenburg Research alleged in a March 2024 report that Equinix inflated growth metrics through fuzzy accounting. Hindenburg claimed Equinix oversubscribed capacity, promising power to customers that it did not possess, allegations the firm denied.

But the enforcement division of the SEC and the U.S. Attorney’s Office for the Northern District of California quickly entered the picture, subpoenaing the company days after the report; Equinix does not expect further action in the state probe, either.

After the report, shareholders filed a class-action lawsuit against Equinix, accusing it of manipulating reported capital expenditures to increase its adjusted funds from operations. Equinix resolved that case with a $41.5 million settlement.

Before the Hindenburg report, Equinix stock was trading around $850 per share and dropped to around $700 per share after an extended sell-off stemming from the report. It recovered to top out at $994 per share in December.

The stock closed at $752.81 on Thursday. The stock is down more than 20 percent year-to-date, but the company posted $2.3 billion in revenue in the third quarter, a 5 percent gain year-over-year.

Equinix counts more than 270 data centers across six of the world’s continents. It is considered a colocation specialist, meaning it rents space and computing power on servers inside its data centers. It has 58 projects under development across the world as data centers continue to boom behind the artificial intelligence craze.

Over the summer, Paul Singer’s activist firm Elliott Investment Management was reported to be growing its stake substantially in Equinix, becoming one of its largest investors.

— Holden Walter-Warner