"Why were all these people and companies buying [SIPX] at such high prices?".
I did for the same reason as they did. I think they bought in that fair market price and they believe the price will go up. I am sure they did better homework than you and me can do. They get access to the even small details. They are not stupid.
Now this over-reaction to accounting misstatement the crowed paniced and over-reacted. Read carefully. In their accounting they did not hide things, they simply reported everything but they made mistakes in classifying appropriately some categories of their sales.
As for the class actions from some unemployeed lawyers... who cares. They do it all the times -- looking for excuses to scam out anything they can. Most of the times they come out empty handed but the shareholders they get always nothing from it anyway.
I think this stock will move all of a sudden some day, back to their previous levels.
You said "In their accounting they did not hide things, they simply reported everything but they made mistakes in classifying appropriately some categories of their sales."
Wrong. The SIPX statement says they: "didn't properly account for sales where price protection, stock rotation or return rights were granted"
My interpretation of this statement is that the pricing of their product upon which revenues and profits were determied were wrong due to "price protection" and that perhaps they booked revs on product that was never actually sold due to "stock rotation or return rights".
Nobody is buying this stock on research because there are no financials available to analyze that can be trusted. Gamblers only are buying this stock. Same odds at the casino. Good luck!