Executives at TheStreet.com allegedly committed accounting fraud and misstated operating income to investors, according to a complaint from the SEC.Gregg Alwine, David Barnett and Eric Ashman have agreed to pay fines and accepted securities industry bans to settle the claims.
Throughout 2008, TheStreet reported revenue from fraudulent transactions at a subsidiary it had acquired the previous year, the agency says.
In particular, the SEC alleges, the pair
- Entered into sham transactions with friendly counterparties that had little or no economic substance.
- Fabricated and backdated contracts and other documents to facilitate the fraudulent accounting.
- Barnett misled TheStreet’s auditor to believe that the subsidiary had performed services to earn revenue on a specific transaction when in fact it did not perform the services.
- Ashman, TheStreet’s former CEO, caused the company to report revenue before it had been earned.
Barnett and Alwine agreed to pay penalties of $130,000 and $120,000 respectively, and to be barred from serving as officers or directors of a public company for 10 years.
Ashman agreed to pay a $125,000 penalty and reimburse TheStreet $34,240.40 under the clawback provision (Section 304) of the Sarbanes-Oxley Act, and will be barred from acting as a director or officer of a public company for three years.