SEC v. Evoqua Water Technologies Corp.; and Imran Parekh, No. 1:23-cv-00105, District of Rhode Island (Mar. 15, 2024) — Judgment

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UNITED STATES DISTRICT COURT
DISTRICT OF RHODE ISLAND

SECURITIES AND EXCHANGE COMMISSION,

   Plaintiff,

 v.

EVOQUA WATER TECHNOLOGIES CORP.
and IMRAN PAREKH,

   Defendants.

     Case No.

FINAL JUDGMENT AS TO DEFENDANT
EVOQUA WATER TECHNOLOGIES CORP.

The Securities and Exchange Commission having filed a Complaint and Defendant
Evoqua Water Technologies Corp. (“Defendant” or the “Company”) having entered a general
appearance; consented to the Court’s jurisdiction over Defendant and the subject matter of this
action; consented to entry of this Final Judgment without admitting or denying the allegations of
the Complaint (except as to jurisdiction); waived findings of fact and conclusions of law; and
waived any right to appeal from this Final Judgment:

I.
 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is
permanently restrained and enjoined from violating Sections 17(a)(2) and (3) of the Securities
Act of 1933 (the “Securities Act”) [15 U.S.C. §§ 77q(a)(2) and (3)] in the offer or sale of any
security by the use of any means or instruments of transportation or communication in interstate
commerce or by use of the mails, directly or indirectly:

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(a) to obtain money or property by means of any untrue statement of a material fact
 or any omission of a material fact necessary in order to make the statements
 made, in light of the circumstances under which they were made, not misleading;
 or
 (b)   to engage in any transaction, practice, or course of business which operates or
  would operate as a fraud or deceit upon the purchaser.
 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive actual notice of this Final Judgment by personal service or otherwise:  (a) Defendant’s
officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
participation with Defendant or with anyone described in (a).

II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from, directly or indirectly, violating Section 13(a) of the
Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-
1, 13a-11, and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11, 240.13a-13]
by failing to file with the Commission accurate annual reports on Form 10-K, current reports on
Form 8-K, and quarterly reports on Form 10-Q, or omitting from these reports such further
material information as is necessary to make the required statements in the reports not
misleading.
 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive actual notice of this Final Judgment by personal service or otherwise:  (a) Defendant’s

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officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
participation with Defendant or with anyone described in (a).

III.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from, directly or indirectly, violating Section 13(b)(2)(A)
of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)] by failing to make and keep books, records, and
accounts which, in reasonable detail, accurately and fairly reflect the transactions and disposition
of its assets.
 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive actual notice of this Final Judgment by personal service or otherwise:  (a) Defendant’s
officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
participation with Defendant or with anyone described in (a).

IV.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from, directly or indirectly, violating Section 13(b)(2)(B)
of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)] by failing to devise and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that its financial
statements are prepared in conforming with GAAP or any other criteria applicable to those
statements.
 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who

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receive actual notice of this Final Judgment by personal service or otherwise:  (a) Defendant’s
officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
participation with Defendant or with anyone described in (a).

V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
shall pay a civil penalty in the amount of $8,500,000 pursuant to Section 20(d) of the Securities
Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].
Defendant shall satisfy this obligation by paying the funds to the Securities and Exchange
Commission within 30 days after entry of this Final Judgment.
Defendant may transmit payment electronically to the Commission, which will provide
detailed ACH transfer/Fedwire instructions upon request.   Payment may also be made directly
from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm
.  Defendant may also pay by certified check, bank
cashier’s check, or United States postal money order payable to the Securities and Exchange
Commission, which shall be delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

 and shall be accompanied by a letter identifying the case title, civil action number, and name of
this Court; Evoqua Water Technologies, Corp. as a defendant in this action; and specifying that
payment is made pursuant to this Final Judgment.
Defendant shall simultaneously transmit photocopies of evidence of payment and case
identifying information to the Commission’s counsel in this action.  By making this payment,

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Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part
of the funds shall be returned to Defendant.
The Commission may enforce the Court’s judgment for penalties by the use of all
collection procedures authorized by law, including the Federal Debt Collection Procedures Act,
28 U.S.C. § 3001 et seq., and moving for civil contempt for the violation of any Court orders
issued in this action.   Defendant shall pay post judgment interest on any amounts due after 30
days of the entry of this Final Judgment pursuant to 28 U.S.C. § 1961.  The Commission shall
hold the funds, together with any interest and income earned thereon (collectively, the “Fund”),
pending further order of the Court.
The Commission may propose a plan to distribute the Fund subject to the Court’s
approval.  Such a plan may provide that the Fund shall be distributed pursuant to the Fair Fund
provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002.  The Court shall retain
jurisdiction over the administration of any distribution of the Fund and the Fund may only be
disbursed pursuant to an Order of the Court.
Regardless of whether any such Fair Fund distribution is made, amounts ordered to be
paid as civil penalties pursuant to this Judgment shall be treated as penalties paid to the
government for all purposes, including all tax purposes.  To preserve the deterrent effect of the
civil penalty, Defendant shall not, after offset or reduction of any award of compensatory
damages in any Related Investor Action based on Defendant’s payment of disgorgement in this
action, argue that it is entitled to, nor shall it further benefit by, offset or reduction of such
compensatory damages award by the amount of any part of Defendant’s payment of a civil
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such
a Penalty Offset, Defendant shall, within 30 days after entry of a final order granting the Penalty

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6
Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset
to the United States Treasury or to a Fair Fund, as the Commission directs.  Such a payment shall
not be deemed an additional civil penalty and shall not be deemed to change the amount of the
civil penalty imposed in this Judgment.  For purposes of this paragraph, a “Related Investor
Action” means a private damages action brought against Defendant by or on behalf of one or
more investors based on substantially the same facts as alleged in the Complaint in this action.

VI.
 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is
incorporated herein with the same force and effect as if fully set forth herein, and that Defendant
shall comply with all of the undertakings and agreements set forth therein, including, but not
limited to, the undertakings to:
(a) Within six (6) months from the date of the Final Judgment, complete a review of
Evoqua’s current controls structure and revenue recognition practices and make
improvements to its internal controls over financial reporting, financial or
accounting policies, and revenue recognition practices, necessary to ensure that
Defendant complies with Generally Accepted Accounting Principles (“GAAP”)
and the securities laws and regulations.  The work will include:
i. An assessment of the Company’s revenue recognition policies and
procedures, and consideration of potential improvements, including the
adoption of an enhanced revenue recognition requirements focused on the
specific criteria in ASC 606, and related documentation requirements
(including bills of lading and related shipping documentation), and

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7
document retention procedures designed to support and test revenue
recognition decisions.
ii. A review of the current sign-off processes, which will include, as
appropriate, the review of sign-off processes for transactions that have
unusual terms, such as conditionality upon third-party contracts or
acceptance, any type of storage arrangement, delayed delivery, or delivery
to a location that is neither a distributor, installer, nor an end user of the
product.  The review will consider potential enhancements to sign-off
processes, including the implementation of a rigorous review by a trained
accountant with revenue recognition expertise to confirm revenue
recognition for product sales within the Aquatics division above 0.5% of
the prior year’s revenue for the division, which would require the trained
accountant to obtain and cross-reference relevant documentation sufficient
to comply with GAAP, including ASC 606.
iii. A review of existing disclosure committee review processes to ensure the
adequate review of revenue trends and the impact on its trend disclosures
from changes to the expected timing of revenue recognition of transactions
in the Company’s sales pipeline;
iv. An assessment of the frequency of reporting of risk concerns to the Audit
Committee; and
v. A review of existing training programs (including any recent remedial
actions in this area) to ensure adequate training regarding relevant revenue
recognition principles for relevant accounting, finance, and sales teams,

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8
including bill-and-hold guidance and other common fact patterns
presenting potential revenue recognition issues under relevant accounting
literature, guidance and past enforcement precedent, including the issues
alleged by the Complaint.
(b) Within twelve (12) months from the date of the Final Judgment, design and
implement Company-wide enhanced documentation requirements concerning
cutoff procedures for the recognition of revenue, oversight, and testing to ensure
that revenue is being recognized within the appropriate reporting period in
compliance with GAAP and the securities laws and regulations;
(c) Within twelve (12) months from the date of the Final Judgment, design and
implement procedures for the integration into the Company of acquired entities
and operating units whose financial results are consolidated by the Company to
ensure the appropriate and timely development, integration, and adoption of
applicable internal controls for financial reporting, accounting policies, and
financial reporting functions for the newly acquired entity or operating unit in
compliance with GAAP and the securities laws and regulations;
(d) Within twelve (12) months from the date of the Final Judgment, the Company and
the Audit Committee shall design and implement procedures and controls to
ensure the timely reporting to the Company’s internal and external auditor of any
tips, complaints, allegations or other relevant information – whether or not
substantiated – concerning any improprieties, violations of Company policies,
deficiencies, insufficient or improperly functioning accounting controls, errors, or
misconduct relating to or potentially impacting the company’s financial reporting,

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9
along with management’s responses for such tips, complaints, allegations or other
relevant information;
(e) Within twelve (12) months from the date of the Final Judgment, the Company and
the Audit Committee shall design and implement procedures and controls for the
timely reporting to the full Audit Committee of any tips, complaints, allegations,
or other relevant information concerning financial matters.  In addition, design
and implement procedures and controls for the regular (annually, quarterly, etc.)
reporting to the full Audit Committee of any: (i) Compliance Helpline cases; (ii)
areas of weakness or concern; and (iii) all matters addressed during the prior year
by the Company’s management; and (iv) any key findings and/or
recommendations regarding any identified issues about the effectiveness of the
Company’s risk management, including applicable internal controls.
(f) Within twelve (12) months from the date of the Final Judgment, design and
implement a process to track, evaluate, and document whether uncorrected errors
or misstatements to current or prior period financial statements are material,
individually or in combination with other misstatements, taking into account
relevant quantitative and qualitative factors.
(g) Within twelve (12) months from the date of the Final Judgment, design and
implement recurring training for relevant Company employees, including sales
and sales support staff, concerning risk assessments and compliance with the
tenets of GAAP relevant to revenue recognition applicable to the employee’s
functional area of responsibility. Training of sales and sales support staff will
include the importance that all terms and conditions of sales transactions are

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10
properly documented and made available to the applicable accounting and finance
staff.
(h) The CEO of Evoqua, or if Defendant closes its announced merger with another
publicly-traded company then the CFO or Chief Accounting Officer of the
successor company, will certify in writing compliance with the undertaking(s) set
forth above.  The certification shall identify the undertaking(s), provide written
evidence of compliance in the form of a narrative, and be supported by exhibits
sufficient to demonstrate compliance.  The Commission staff may make
reasonable requests for further evidence of compliance, and Defendant agrees to
provide such evidence.  Defendant shall submit the certification and supporting
material to John Dugan, Associate Director, Division of Enforcement, Securities
and Exchange Commission, Boston Regional Office, 33 Arch Street, 24th Floor,
Boston, MA 02110, with a copy to the Office of Chief Counsel of the
Enforcement Division, no later than sixty (60) days from the date of the
completion of the undertakings.
(i) For purposes of these undertakings, if the Defendant closes its announced merger
with another publicly-traded company, the references to Evoqua or the Company
shall apply to the historical Evoqua business as then operated within the successor
company.

VII.

 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.

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VIII.
There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil
Procedure, the Clerk is ordered to enter this Final Judgment forthwith and without further notice.
Dated:  ______________, 2023
____________________________________
UNITED STATES DISTRICT JUDGE
July 10

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UNITED STATES DISTRICT COURT 
DISTRICT OF RHODE ISLAND 

 
 
SECURITIES AND EXCHANGE COMMISSION,  
 
   Plaintiff,  
 
 v. 
 
EVOQUA WATER TECHNOLOGIES CORP. 
and IMRAN PAREKH, 
 
   Defendants. 
    

  
 
   
     Case No. 
 
 
 

 

FINAL JUDGMENT AS TO DEFENDANT 
EVOQUA WATER TECHNOLOGIES CORP. 

 
The Securities and Exchange Commission having filed a Complaint and Defendant 

Evoqua Water Technologies Corp. (“Defendant” or the “Company”) having entered a general 

appearance; consented to the Court’s jurisdiction over Defendant and the subject matter of this 

action; consented to entry of this Final Judgment without admitting or denying the allegations of 

the Complaint (except as to jurisdiction); waived findings of fact and conclusions of law; and 

waived any right to appeal from this Final Judgment: 

 
I. 

 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is 

permanently restrained and enjoined from violating Sections 17(a)(2) and (3) of the Securities 

Act of 1933 (the “Securities Act”) [15 U.S.C. §§ 77q(a)(2) and (3)] in the offer or sale of any 

security by the use of any means or instruments of transportation or communication in interstate 

commerce or by use of the mails, directly or indirectly: 

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2 

(a) to obtain money or property by means of any untrue statement of a material fact 

 or any omission of a material fact necessary in order to make the statements 

 made, in light of the circumstances under which they were made, not misleading; 

 or 

 (b) to engage in any transaction, practice, or course of business which operates or  

  would operate as a fraud or deceit upon the purchaser. 

 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise:  (a) Defendant’s 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

 
II. 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 

is permanently restrained and enjoined from, directly or indirectly, violating Section 13(a) of the 

Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-

1, 13a-11, and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11, 240.13a-13] 

by failing to file with the Commission accurate annual reports on Form 10-K, current reports on 

Form 8-K, and quarterly reports on Form 10-Q, or omitting from these reports such further 

material information as is necessary to make the required statements in the reports not 

misleading. 

 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise:  (a) Defendant’s 

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officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

 
III. 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 

is permanently restrained and enjoined from, directly or indirectly, violating Section 13(b)(2)(A) 

of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)] by failing to make and keep books, records, and 

accounts which, in reasonable detail, accurately and fairly reflect the transactions and disposition 

of its assets. 

 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise:  (a) Defendant’s 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

 
IV. 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 

is permanently restrained and enjoined from, directly or indirectly, violating Section 13(b)(2)(B) 

of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)] by failing to devise and maintain a system of 

internal accounting controls sufficient to provide reasonable assurances that its financial 

statements are prepared in conforming with GAAP or any other criteria applicable to those 

statements. 

 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 

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receive actual notice of this Final Judgment by personal service or otherwise:  (a) Defendant’s 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

 
V. 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 

shall pay a civil penalty in the amount of $8,500,000 pursuant to Section 20(d) of the Securities 

Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].  

Defendant shall satisfy this obligation by paying the funds to the Securities and Exchange 

Commission within 30 days after entry of this Final Judgment. 

Defendant may transmit payment electronically to the Commission, which will provide 

detailed ACH transfer/Fedwire instructions upon request.   Payment may also be made directly 

from a bank account via Pay.gov through the SEC website at 

http://www.sec.gov/about/offices/ofm.htm.  Defendant may also pay by certified check, bank 

cashier’s check, or United States postal money order payable to the Securities and Exchange 

Commission, which shall be delivered or mailed to  

Enterprise Services Center 
Accounts Receivable Branch 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 

 and shall be accompanied by a letter identifying the case title, civil action number, and name of 

this Court; Evoqua Water Technologies, Corp. as a defendant in this action; and specifying that 

payment is made pursuant to this Final Judgment.   

Defendant shall simultaneously transmit photocopies of evidence of payment and case 

identifying information to the Commission’s counsel in this action.  By making this payment, 

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http://www.sec.gov/about/offices/ofm.htm


5 

Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part 

of the funds shall be returned to Defendant.   

The Commission may enforce the Court’s judgment for penalties by the use of all 

collection procedures authorized by law, including the Federal Debt Collection Procedures Act, 

28 U.S.C. § 3001 et seq., and moving for civil contempt for the violation of any Court orders 

issued in this action.   Defendant shall pay post judgment interest on any amounts due after 30 

days of the entry of this Final Judgment pursuant to 28 U.S.C. § 1961.  The Commission shall 

hold the funds, together with any interest and income earned thereon (collectively, the “Fund”), 

pending further order of the Court.     

The Commission may propose a plan to distribute the Fund subject to the Court’s 

approval.  Such a plan may provide that the Fund shall be distributed pursuant to the Fair Fund 

provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002.  The Court shall retain 

jurisdiction over the administration of any distribution of the Fund and the Fund may only be 

disbursed pursuant to an Order of the Court.    

Regardless of whether any such Fair Fund distribution is made, amounts ordered to be 

paid as civil penalties pursuant to this Judgment shall be treated as penalties paid to the 

government for all purposes, including all tax purposes.  To preserve the deterrent effect of the 

civil penalty, Defendant shall not, after offset or reduction of any award of compensatory 

damages in any Related Investor Action based on Defendant’s payment of disgorgement in this 

action, argue that it is entitled to, nor shall it further benefit by, offset or reduction of such 

compensatory damages award by the amount of any part of Defendant’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 

a Penalty Offset, Defendant shall, within 30 days after entry of a final order granting the Penalty 

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6 

Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset 

to the United States Treasury or to a Fair Fund, as the Commission directs.  Such a payment shall 

not be deemed an additional civil penalty and shall not be deemed to change the amount of the 

civil penalty imposed in this Judgment.  For purposes of this paragraph, a “Related Investor 

Action” means a private damages action brought against Defendant by or on behalf of one or 

more investors based on substantially the same facts as alleged in the Complaint in this action. 

 
VI. 

 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is 

incorporated herein with the same force and effect as if fully set forth herein, and that Defendant 

shall comply with all of the undertakings and agreements set forth therein, including, but not 

limited to, the undertakings to: 

(a) Within six (6) months from the date of the Final Judgment, complete a review of 

Evoqua’s current controls structure and revenue recognition practices and make 

improvements to its internal controls over financial reporting, financial or 

accounting policies, and revenue recognition practices, necessary to ensure that 

Defendant complies with Generally Accepted Accounting Principles (“GAAP”) 

and the securities laws and regulations.  The work will include: 

i. An assessment of the Company’s revenue recognition policies and 

procedures, and consideration of potential improvements, including the 

adoption of an enhanced revenue recognition requirements focused on the 

specific criteria in ASC 606, and related documentation requirements 

(including bills of lading and related shipping documentation), and 

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7 

document retention procedures designed to support and test revenue 

recognition decisions.  

ii. A review of the current sign-off processes, which will include, as 

appropriate, the review of sign-off processes for transactions that have 

unusual terms, such as conditionality upon third-party contracts or 

acceptance, any type of storage arrangement, delayed delivery, or delivery 

to a location that is neither a distributor, installer, nor an end user of the 

product.  The review will consider potential enhancements to sign-off 

processes, including the implementation of a rigorous review by a trained 

accountant with revenue recognition expertise to confirm revenue 

recognition for product sales within the Aquatics division above 0.5% of 

the prior year’s revenue for the division, which would require the trained 

accountant to obtain and cross-reference relevant documentation sufficient 

to comply with GAAP, including ASC 606.   

iii. A review of existing disclosure committee review processes to ensure the 

adequate review of revenue trends and the impact on its trend disclosures 

from changes to the expected timing of revenue recognition of transactions 

in the Company’s sales pipeline; 

iv. An assessment of the frequency of reporting of risk concerns to the Audit 

Committee; and 

v. A review of existing training programs (including any recent remedial 

actions in this area) to ensure adequate training regarding relevant revenue 

recognition principles for relevant accounting, finance, and sales teams, 

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8 

including bill-and-hold guidance and other common fact patterns 

presenting potential revenue recognition issues under relevant accounting 

literature, guidance and past enforcement precedent, including the issues 

alleged by the Complaint. 

(b) Within twelve (12) months from the date of the Final Judgment, design and 

implement Company-wide enhanced documentation requirements concerning 

cutoff procedures for the recognition of revenue, oversight, and testing to ensure 

that revenue is being recognized within the appropriate reporting period in 

compliance with GAAP and the securities laws and regulations;  

(c) Within twelve (12) months from the date of the Final Judgment, design and 

implement procedures for the integration into the Company of acquired entities 

and operating units whose financial results are consolidated by the Company to 

ensure the appropriate and timely development, integration, and adoption of 

applicable internal controls for financial reporting, accounting policies, and 

financial reporting functions for the newly acquired entity or operating unit in 

compliance with GAAP and the securities laws and regulations; 

(d) Within twelve (12) months from the date of the Final Judgment, the Company and 

the Audit Committee shall design and implement procedures and controls to 

ensure the timely reporting to the Company’s internal and external auditor of any 

tips, complaints, allegations or other relevant information – whether or not 

substantiated – concerning any improprieties, violations of Company policies, 

deficiencies, insufficient or improperly functioning accounting controls, errors, or 

misconduct relating to or potentially impacting the company’s financial reporting, 

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along with management’s responses for such tips, complaints, allegations or other 

relevant information; 

(e) Within twelve (12) months from the date of the Final Judgment, the Company and 

the Audit Committee shall design and implement procedures and controls for the 

timely reporting to the full Audit Committee of any tips, complaints, allegations, 

or other relevant information concerning financial matters.  In addition, design 

and implement procedures and controls for the regular (annually, quarterly, etc.) 

reporting to the full Audit Committee of any: (i) Compliance Helpline cases; (ii) 

areas of weakness or concern; and (iii) all matters addressed during the prior year 

by the Company’s management; and (iv) any key findings and/or 

recommendations regarding any identified issues about the effectiveness of the 

Company’s risk management, including applicable internal controls.   

(f) Within twelve (12) months from the date of the Final Judgment, design and 

implement a process to track, evaluate, and document whether uncorrected errors 

or misstatements to current or prior period financial statements are material, 

individually or in combination with other misstatements, taking into account 

relevant quantitative and qualitative factors. 

(g) Within twelve (12) months from the date of the Final Judgment, design and 

implement recurring training for relevant Company employees, including sales 

and sales support staff, concerning risk assessments and compliance with the 

tenets of GAAP relevant to revenue recognition applicable to the employee’s 

functional area of responsibility. Training of sales and sales support staff will 

include the importance that all terms and conditions of sales transactions are 

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properly documented and made available to the applicable accounting and finance 

staff.    

(h) The CEO of Evoqua, or if Defendant closes its announced merger with another 

publicly-traded company then the CFO or Chief Accounting Officer of the 

successor company, will certify in writing compliance with the undertaking(s) set 

forth above.  The certification shall identify the undertaking(s), provide written 

evidence of compliance in the form of a narrative, and be supported by exhibits 

sufficient to demonstrate compliance.  The Commission staff may make 

reasonable requests for further evidence of compliance, and Defendant agrees to 

provide such evidence.  Defendant shall submit the certification and supporting 

material to John Dugan, Associate Director, Division of Enforcement, Securities 

and Exchange Commission, Boston Regional Office, 33 Arch Street, 24th Floor, 

Boston, MA 02110, with a copy to the Office of Chief Counsel of the 

Enforcement Division, no later than sixty (60) days from the date of the 

completion of the undertakings. 

(i) For purposes of these undertakings, if the Defendant closes its announced merger 

with another publicly-traded company, the references to Evoqua or the Company 

shall apply to the historical Evoqua business as then operated within the successor 

company. 

 
VII.  

 
 IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain 

jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. 

 

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VIII. 

There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil 

Procedure, the Clerk is ordered to enter this Final Judgment forthwith and without further notice. 

Dated:  ______________, 2023 

____________________________________ 
UNITED STATES DISTRICT JUDGE 

July 10

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