Spruce Point Capital Management has released a short report on Xylem, and put a 30% to 45% downside risk on the U.S. water technology provider’s stock due to alleged “acquisition blunders” and poor management.

In an August 9 report, the short seller called for Xylem CEO Patrick Decker’s resignation, citing “major issues” with Xylem’s recently closed $7.5 billion acquisition of Evoqua, a wastewater treatment company which it said was ordered by the U.S. Securities and Exchange Commission (SEC) to pay an $8.5-million civil penalty over charges of improper accounting and misleading investors. Spruce Point stated that the poorly managed acquisition was “the tip of the iceberg.”

The report stated that the SEC said that Evoqua’s former finance director Imran Parekh had engaged in fraudulent accounting practices that resulted in the company improperly reporting materially false revenue figures in filings from 2017 to 2018.

“The transaction is predicated primarily on $140 million of cost savings synergies,” Spruce Point said, adding that “Xylem has not offered any quantitative assessment of the opportunities. Even worse, we find evidence of underappreciated revenue dis-synergies being omitted by Xylem.”

Spruce Point also expressed concerns about the accuracy of Xylem’s cash liquidity and its ability to meet Wall Street’s aggressive financial expectations.

“We do not believe investors should bet on Xylem’s success given its acquisition blunders and failure to rationalize its legacy business,” the short seller concluded.

On August 2, Xylem released its second quarter results including the May 24 acquisition of Evoqua, reporting revenue growth of 26%.

Xylem’s shares had fallen by over 3% at $101.92 at 10:19 a.m. in New York.