Friday, August 18, 2017

Former Bankrate execs to pay combined $291K to settle SEC charges

By Mark S. Nelson, J.D.

Edward DiMaria and Matthew Gamsey will pay combined penalties of over $291,000 to resolve the SEC’s charges that they manipulated Bankrate Inc.’s financials to assuage the expectations of analysts who followed the company. DiMaria had also been charged with taking advantage of the manipulation to sell Bankrate stock at inflated prices. DiMaria, Bankrate’s ex-CFO, and Gamsey, Bankrate’s former accounting director, consented to entry of final judgments by a judge in the Southern District of New York without admitting or denying the SEC’s allegations (SEC v. DiMaria (Gamsey), August 16, 2017, Woods, G.).

According to the SEC’s complaint, the Bankrate scheme emerged after the company missed analysts’ expectations in Q2 2012. The SEC said DiMaria enlisted Gamsey and ex-Bankrate VP of Finance Hyunjin Lerner to book unsupported revenue that impacted the company’s insurance and credit card divisions, the latter of which objected before booking some of the additional revenue.

Bankrate paid $15 million to settle the SEC’s charges against it; Lerner also settled for $180,000. But DiMaria and Gamsey chose to fight the SEC’s charges. The SEC’s case against DiMaria and Gamsey was trimmed in some respects last year.

Moreover, DiMaria and Gamsey separately agreed to be suspended from appearing or practicing before the SEC as accountants, although both can later seek reinstatement (DiMaria in five years; Gamsey in three years). Of the more than $291,000 total judgment obtained by the SEC, DiMaria will pay $231,159 in penalties, disgorgement and prejudgment interest, while Gamsey will pay a $60,000 penalty. DiMaria also is subject to a five-year officer and director bar.

The case is No. 15-cv-07035 (DiMaria; Gamsey).