- The SEC has concluded its investigation into Equinix and will not pursue enforcement action, the company disclosed in a recent filing.
- The probe followed allegations from Hindenburg Research in 2024 that the REIT used questionable accounting and oversubscribed power capacity to inflate performance metrics.
- Equinix previously paid $41.5M to settle a class-action lawsuit tied to similar claims, but maintains its denial of wrongdoing.
- Despite volatility after the Hindenburg report, Equinix’s stock has rebounded and the REIT continues to grow amid surging AI-related demand.
Regulatory Relief
Equinix announced Thursday that the US Securities and Exchange Commission has formally closed its investigation without recommending further action, reports Bisnow. The agency had been probing the data center REIT following a 2024 short-seller report from Hindenburg Research. The report alleged financial misrepresentation and claimed Equinix was overpromising on power capacity—an increasingly critical resource in the data center sector.
In an SEC filing, Equinix also said it expects no additional action from a parallel state-level investigation.
Background
The scrutiny began after Hindenburg accused Equinix of inflating growth metrics and misleading investors about its available power capacity. Power availability is now a key determinant of value across the energy-constrained digital infrastructure sector, impacting development and investor expectations. The REIT denied the claims but later received subpoenas from the SEC and US Attorney’s Office for Northern California.
The accusations also sparked a shareholder lawsuit alleging manipulation of reported capital expenditures to inflate adjusted funds from operations (AFFO). AFFO is a key performance metric for REITs. Equinix settled the class-action case for $41.5M in July.
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
Market Reaction
Equinix shares rose slightly after the SEC announcement but remain over 18% below their price at the start of 2025. After the March 2024 Hindenburg report triggered a sharp selloff, shares fell from roughly $850 to $700. They later rebounded to a 52-week high of $994 in December.
Business Outlook
Despite legal headwinds, Equinix has continued to expand, driven by surging demand for AI-related data center infrastructure. In Q3 2025, it reported $2.3B in revenue (up 5% YoY) and $474M in operating income (up 12%). The company has 58 development projects underway globally.
Founded in 1988 and converted to a REIT in 2015, Equinix specializes in colocation services, leasing out data center space and computing infrastructure.
Broader Context
The SEC has pursued 30% fewer enforcement actions against public companies in 2025, according to Cornerstone Research. This decline is part of a broader slowdown attributed to leadership changes and other internal shifts at the agency. Analysts say overall activity is down, but the year saw unusually low monetary penalties and inconsistent enforcement across public company cases.
Why It Matters
The closure of the SEC probe without charges removes a significant overhang for Equinix and signals growing scrutiny of data center accounting practices as the sector becomes a linchpin of AI-driven infrastructure.
