Super Micro has agreed to pay $17.5 million to settle charges that the computer server maker and its former CFO engaged in improper accounting practices to accelerate the recognition of revenue.

According to the U.S. Securities and Exchange Commission, former CFO Howard Hideshima pressured employees to maximize revenue at the end of quarters, typically sending dozens of emails to salespeople and other executives to try to boost sales.

As a result, the SEC said in an administrative order, Super Micro improperly and prematurely recognized revenue for fiscal 2015 through fiscal 2017 by recognizing revenue on goods it had yet to deliver to customers, shipping goods to customers prior to customer authorization, and shipping misassembled goods to customers.

To settle the charges, the company agreed to pay a $17.5 million civil penalty while Hideshima agreed to pay disgorgement and prejudgment interest totaling more than $300,000 and a $50,000 penalty. The government said he sold Super Micro stock at a profit while the improper accounting was occurring.

“Reporting revenue in the wrong period gives investors a distorted view of a company’s financial condition,” Melissa Hodgman, an associate director in the SEC’s Division of Enforcement, said in a news release. “The SEC will continue to hold executives accountable when they exploit insufficient internal controls.”

Hideshima, 60, served as Super Micro’s CFO from 2006 through 2018. The SEC said he was “on notice that Super Micro employees engaged in a number of improper practices to accelerate revenue recognition and reporting” but “failed to adequately address the internal accounting control failures and stop these practices going forward.”

In some instances, Super Micro allegedly recognized revenue before delivery by sending goods to storage facilities controlled by third parties at quarter-end and paying storage fees until the goods were delivered to its customer.

The company also prematurely recognized more than $45 million in revenue by recognizing revenue upon shipment to a large customer when the shipping terms required recognition upon delivery and Hideshima approved the recognition of more than $150 million in revenue from a customer who was consistently overdue in making payments, the commission said.

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