(Adds Evoqua comment, SEC accusations, additional settlement
details)
By Jonathan Stempel
March 13 (Reuters) - Evoqua Water Technologies Corp will pay an $8.5 million fine to settle U.S. Securities
and Exchange Commission (SEC)charges that the water treatment
company used improper accounting to fraudulently inflate revenue
in 2017 and 2018, including during its initial public offering.
The SEC said on Monday that its civil settlement with the
Pittsburgh-based company also resolves charges against Imran
Parekh, a former finance director at its Neptune Benson unit and
the "ultimate decision maker" within his group.
Evoqua was accused of recognizing revenue too early from the
sale of filtration products through alleged improper accounting
for "bill-and-hold" transactions, where companies bill for
products that are delivered on a later date.
According to the SEC, Rhode Island-based Neptune improperly
recognized revenue in connection with at least 120 transactions,
and Evoqua reported nearly $12 million of extra expected revenue
in filings related to its Nov. 2017 IPO.
Parekh allegedly faced internal pressure after one of his
bosses sent a Sept. 1, 2017 email about the need to meet
financial targets "as the timing for the IPO gets firmed up and
the company wants to demonstrate a solid performance," the SEC
said.
The SEC said Parekh agreed to an injunction against further
securities law violations, and will be subject to a civil fine
and disgorgement.
Evoqua said it cooperated with the SEC, and settled based on
its "strong desire" to put the matter behind it. Parekh declined
to comment.
Both settlements require approval by a federal judge in
Rhode Island, where the case was filed. Neither defendant
admitted or denied wrongdoing.
(Reporting by Jonathan Stempel in New York and Chris Prentice
in Washington, D.C.; Editing by Bill Berkrot)
Messaging: jon.stempel.thomsonreuters.com@reuters.net))
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