Bankrate, the popular personal finance company that rates mortgages and credit cards, agreed Tuesday to pay $15 million to the Securities and Exchange Commission to settle accounting fraud charges. Three Bankrate (RATE) executives were also charged with inflating the company's financial results to meet analyst expectations.
The SEC investigation was related to Bankrate's historical financial reporting for the quarter ended June 30, 2012.
Without admitting or denying the findings in the SEC's administrative cease-and-desist order, Bankrate agreed to pay a civil penalty of $15 million and entered into a consent order.
The SEC alleges that Bankrate's former CFO Edward DiMaria, former director of accounting Matthew Gamsey, and former 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 states.
"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," said Andrew Ceresney, director of the SEC's Division of Enforcement, in a statement. "Bankrate manipulated its financial results through numerous small accounting entries in order to meet analyst estimates on a key metric."
