Risk & Compliance

Bankrate Settles SEC’s Accounting Fraud Charges for $15 Million

The online personal finance publisher's former CFO is implicated in charges that include fabricating revenues
Katie Kuehner-HebertSeptember 8, 2015
Bankrate Settles SEC’s Accounting Fraud Charges for $15 Million

Bankrate, the online publisher of personal finance information, has agreed to pay the Securities and Exchange Commission $15 million to settle accounting fraud charges that include fabricating revenues and avoiding booking certain expenses to meet analyst estimates.

sec logoThe SEC alleged that Bankrate’s then-CFO Edward DiMaria, then-director of accounting Matthew Gamsey, and then-vice president of finance Hyunjin Lerner engaged in a scheme to fabricate revenues and avoid booking certain expenses to meet analyst estimates for a key financial metric: adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Bankrate consequently overstated its second quarter 2012 net income, the SEC alleged.  The publisher’s stock rose when the company announced the inflated financial results, and DiMaria allegedly proceeded to sell more than $2 million in company stock.

Lerner agreed to pay more than $180,000 to settle the SEC’s charges.  The litigation continues against DiMaria and Gamsey.

“We allege that at the highest levels of its accounting department, Bankrate improperly inflated its financial performance to avoid falling short of Wall Street’s expectations,” Andrew J. Ceresney, director of the SEC’s division of enforcement said in a press release. “Bankrate manipulated its financial results through numerous small accounting entries in order to meet analyst estimates on a key metric.”

Bankrate and Lerner consented to an order to cease and desist from violating the antifraud, reporting, books-and-records, and internal controls provisions of the federal securities laws. Without admitting or denying the SEC’s findings, Bankrate agreed to pay a $15 million penalty and Lerner agreed to pay a $150,000 penalty as well as full disgorgement of ill-gotten gains of $30,045 he collected from selling Bankrate stock after the company announced false financial results.  Lerner also agreed to be barred from serving as an officer or director at a public company for five years and from public company accounting for at least five years.

The SEC’s complaint filed against DiMaria and Gamsey alleges they violated or aided and abetted the violation of the antifraud, lying-to-auditors, books-and-records, and reporting provisions of the federal securities laws.  The SEC is seeking financial penalties, officer-and-director bars, and prohibitions on working in public company accounting. The SEC also seeks to recover the profits improperly obtained by DiMaria when he sold his Bankrate stock following the release of the inflated second quarter 2012 financial results.

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