A California-based server and cloud computing firm has agreed to pay $17.5 million as part of a settlement with the Securities and Exchange Commission (SEC) to resolve charges of improperly booked revenue and understated expenses.

The SEC charged Super Micro Computer and its former CFO, Howard Hideshima, with “prematurely recognizing revenue and understating expenses over a period of at least three years,” according to a press release Tuesday.

The scheme involved prematurely booking revenue on goods sent to warehouses but not yet delivered to customers, shipping goods to customers prior to customer authorization, and shipping misassembled goods to customers. The SEC said Super Micro also misused its cooperative marketing program, reducing liabilities accrued for the program in order to avoid recognizing marketing-related expenses like buying Christmas gifts and to store goods.

According to the SEC’s order against Super Micro, on several occasions the company delivered products before customers wanted them, in one case purchasing freight containers to store the goods on the customer’s property.

In another case, “Super Micro shipped product to a customer who had not wanted the goods delivered for another month. A few days after the shipment, the customer stated, ‘Please reject this shipment … Why are you shipping this now?’” the order said. “In response, the Super Micro salesperson requested, ‘Can you please help to approve this shipment to help with our 5 quarter end? I was instructed by our management to push all the orders out before our quarter end which is also our year end… . we will just need your special support for this time.’ The customer again rejected the request. Nevertheless, the revenue was improperly recognized at the time of shipment.”

The SEC found Super Micro’s company culture “aggressively” focused on quarterly revenue “without sufficient focus on compliance”; that senior management failed to “establish and promote a control environment with an appropriate tone of compliance and control consciousness throughout the entire company”; that the company had “an inappropriate tone at the top,”; and that the company “failed to hire personnel who had appropriate levels of knowledge and experience or to provide adequate training to its personnel.”

Because the three-year long scheme inflated the value of Super Micro, the SEC ordered that Hideshima pay $300,000 in disgorgement and prejudgment interest and a $50,000 fine. Hideshima had been placed on notice about these practices but failed to address them, according to the SEC’s order against him.

“Hideshima did not put in place sufficient internal accounting controls to address this improper practice and, in at least one instance, he failed to reverse the recognition of revenue after he was on notice that Super Micro sent the wrong goods to a customer and had to perform significant work in the subsequent months to address the problem,” the order said. Hideshima left the company in 2018.

While the company’s founder and CEO, Charles Liang, was not charged with misconduct, he was ordered to reimburse the company $2.1 million in stock profits that he received while the accounting errors were occurring. The move is pursuant to the clawback provision of the Sarbanes-Oxley Act, the SEC said.

Super Micro did not admit or deny the SEC’s findings, but cooperated with the SEC investigation “and its remedial efforts, including substantial improvements to its internal controls, and reorganizing and enhancing its management team,” the company said in a statement.

”We fell short of our standards, and we have implemented numerous remedial actions and internal control enhancements to prevent such errors from recurring,” Liang said in the statement. “Our strengthened financial accounting and management team will help us continue building value for shareholders and customers as we innovate in high-performance, high-efficiency server and cloud technology.”

The practice of booking sales in one quarter that is meant for another are contrary to SEC regulations and Generally Accepted Accounting Principles (GAAP).

Under Armour, an athletic wear manufacturer, was recently put on notice by the SEC of a potential enforcement action involving the “pulling forward” of sales from one quarter into another in order to improve the company’s balance sheet.

Accounting scandals have dominated the news in 2020. Germany’s Wirecard was found to have recorded $2 billion in revenue on its books that was later found to be nonexistent. Chinese companies Luckin Coffee and video streaming company iQIYI were accused of fabricating millions of dollars in sales.