Today the Security and Exchange commission has officially filed charges against digital financial media company TheStreet, Inc. (NASDAQ:TST) (owner of TheStreet.com). Three specific executives within the company have also had charges filed directly against them as well for their active participation in acts of accounting fraud that superficially enhanced the revenue of the company, as well as misrepresented operating income values to potential and current investors.
Specifically the SEC believes that TheStreet, Inc. (NASDAQ:TST), the owner of financial website TheStreet.com, reported fraudulent revenue and transactions in 2008 from one of its subsidiary company's that it had purchased the prior year. David Barnett and Gregg Alwine, both co-presidents of the subsidiary, entered false transactions that had slim to zero economic merit. In addition to this, contracts were also forged and backdated as well in an attempt to bolster the deceptive accounting. Barnett has also been charged for misleading the company's auditor to believe that the subsidiary company had been paid for services it had completed, when in fact it had not completed any services at all. The SEC has also claimed that the former CFO of TheStreet Inc. Eric Ashman reported revenue and income before it had even been earned. Ashman was fined $125,000, ordered to pay a reimbursement fee of $34,240.40 to TheStreet Inc, and also prohibited from serving as a director or officer of public company's for three years.
The director of the SEC's New York Office, Andrew Calamari, had the following to say about the allegations; "Alwine and Barnett used crooked tactics, Ashman ignored basic accounting rules, and TheStreet, Inc. (NASDAQ:TST) failed to put controls in place to spot the wrongdoing." He also went on to say "The SEC will continue to root out accounting fraud and punish the executives responsible."