Dec 18 Three former executives of the TheStreet
Inc have agreed to pay civil penalties totaling $375,000
to settle accounting fraud allegations, the U.S. Securities and
Exchange Commission said on Tuesday.
TheStreet, a financial media company that operates
TheStreet.com website, was also charged in the case. The SEC
said the company filed false financial reports in 2008 by
reporting revenue from fraudulent transactions at a subsidiary.
"Without admitting or denying the allegations, the three
executives and TheStreet agreed to be permanently enjoined from
future violations of the federal securities laws," the SEC said
in a statement.
TheStreet Chief Executive Elisabeth DeMarse, who joined the
company earlier this year, said in a statement the company
cooperated with the SEC and conducted its own internal
"Upon learning of the irregularities, we promptly reported
the matter to the SEC," she said. "Under the terms of the
settlement TheStreet is not required to pay any monetary
penalties. We are pleased to put this matter behind us."
As part of the settlement, former Chief Financial Officer
Eric Ashman of Brooklyn, New York, agreed to pay a $125,000
penalty to the agency. He also agreed to reimburse TheStreet
$34,149 for compensation he received from the company, the SEC
Gregg Alwine and David Barnett, former co-presidents of the
company's Corsis subsidiary, agreed to pay the SEC penalties of
$120,000 and $130,000, respectively.
"Alwine and Barnett used crooked tactics, Ashman ignored
basic accounting rules, and TheStreet failed to put controls in
place to spot the wrongdoing," said Andrew Calamari, director of
the SEC's New York Regional Office.
In documents filed in U.S. District Court in Manhattan, the
SEC said Ashman was responsible for improperly recorded revenue
at Corsis, a company that TheStreet acquired from Alwine and
Barnett in 2007 as a way to expand online advertising.
The $20.7 million acquisition did not pan out as expected
and Ashman directed staff to inflate Corsis revenue, according
to the SEC complaint. That eventually led to TheStreet restating
its 2008 annual report and its financial report for the first
quarter of 2009.
Ashman served as CFO of TheStreet from July 2006 to May
2009. As part of the settlement, he agreed not to serve as an
officer or director of any public company for three years.
Alwine and Barnett have agreed to similar bans for 10 years.
The agreements require court approval.
Market commentator Jim Cramer founded TheStreet in 1996.