SEC targets, former execs in accounting fraud

Charges stem from 2008 financials at subsidiary

Dec 18, 2012 @ 4:09 pm

By Liz Skinner

Operators of the popular financial news site and three of its former executives inflated the company's revenue and significantly misstated financial results in 2008, the Securities and Exchange Commission alleged in a lawsuit Tuesday.

TheStreet Inc. (Ticker:TST) — which CNBC personality Jim Cramer co-founded in 1996 — and former executives Gregg Alwine, David Barnett and Eric Ashman agreed to settle the allegations that stemmed from subsidiary, which TheStreet acquired in 2007 and sold in 2009, the SEC said.

In settling the charges, the three executives agreed to pay a total of about $400,000 and to be barred from serving as officers and directors in a public company. They neither admitted nor denied the allegations.

“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 region. “The SEC will continue to root out accounting fraud and punish the executives responsible.” gained an adviser following in the late 1990s for its investment news and market analysis. The company has grown from one website to multiple platforms for investors, including subscription services. specialized in online promos such as sweepstakes.

In a complaint filed in federal court in New York, the SEC said that TheStreet reported revenue from sham transactions through its subsidiary and tbat co-presidents Alwine and Barnett created fake contracts to support the fraudulent accounting.

Mr. Ashman, TheStreet's former chief financial officer, caused the company to report revenue before it had been earned, the SEC said. The three executives' New York attorneys did not immediately return calls seeking comment on the settlements.

TheStreet settled the allegations that it failed to put in place internal controls at by agreeing not to violate securities laws. TheStreet's attorney referred calls to the company's chief financial officer, Thomas Etergino, who could not be reached for comment.

In February 2010, TheStreet restated its 2008 financial results and disclosed revenue improprieties at the subsidiary, the SEC said in the complaint.


What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video


Vanguard's Joe Davis: Prepare for lower expected returns

The next five years will be more challenging for the markets than the past five, according to Joe Davis, global chief economist at Vanguard. Here's why it's more important than ever to stay reasonable with return expectations and stick to the plan.

Video Spotlight

Are Your Clients Prepared For Market Downturns?

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

10 things clients say that make you cringe

Sometimes clients say stupid things. Here are 10 classics.

HighTower faces pressure to let investors cash out

After an IPO planned for last year didn't happen, the company could opt to satisfy its backers with a sale.

Envestnet to buy FolioDynamix

The deal, which is expected to close in the first quarter of 2018, will bring the total assets Envestnet works with to almost $2 trillion.

Jerry Schlichter's fee lawsuits have left an indelible mark on the 401(k) industry

After a decade of litigation, fees are lower and retirement plans are more transparent. But have the lawsuits gone too far?

10 best financial adviser jokes

How many financial advisers does it take to screw in a lightbulb?


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print