By Jonathan Stempel
NEW YORK (Reuters) - Bankrate Inc (N:RATE) agreed to pay $15 million to settle U.S. Securities and Exchange Commission charges that it engaged in accounting fraud to ensure that its financial results met analyst expectations.
The SEC also sued former Chief Financial Officer Edward DiMaria and former director of accounting Matthew Gamsey, and reached a $180,045 settlement with former vice president of finance Hyunjin Lerner.
Bankrate is a New York-based consumer financial information provider known for its Bankrate.com and CreditCards.com websites.
The SEC accused the company and the finance officials of scheming to boost revenue and understate expenses to meet analyst targets for adjusted earnings before interest, taxes, depreciation and amortization for the second quarter of 2012.
Court papers detail how DiMaria allegedly threatened to "rip (the) head off" Bankrate's top credit card executive if $500,000 of improper revenue was not booked, and Gamsey said DiMaria was "treading on very thin ice" in trying to justify the booking.
The SEC said Bankrate posted artificially inflated results on July 31, 2012, causing its share price to rise 10.2 percent the next day. It said DiMaria soon sold $2 million of company stock at inflated prices, and that Lerner also sold some stock.
Bankrate pursued "a form of earnings management that is pernicious and highly problematic," SEC enforcement director Andrew Ceresney said on a conference call.
The company and Lerner did not admit wrongdoing, and Bankrate said it reserved funds for the accord in its current quarter.
Bankrate previously said the U.S. Department of Justice was also investigating matters that were the subject of the SEC probe. Justice Department spokesman Peter Carr declined to comment.
In afternoon trading, Bankrate shares were up 47 cents, or 4.6 percent, at $10.74. They rose after the SEC accord was announced.
Lawyers for DiMaria and Gamsey said their clients will defend against the SEC charges.
Barry Berke, a lawyer for DiMaria, said: "At all times, Edward DiMaria worked diligently and in good faith to make sure that Bankrate's financial reporting accurately reflected the company's performance."
Gamsey's lawyer Robert Knuts said: "Matt Gamsey did nothing wrong by raising concerns early in the financial reporting process about some accounting entries that were immaterial to Bankrate's financial statements."
Lerner's lawyer Lawrence Iason declined to comment.
In another SEC accounting settlement announced on Tuesday, sports nutrition company MusclePharm Corp (PK:MSLP) agreed to pay $700,000 over charges including its alleged failure to disclose nearly a half-million dollars of executive perks.
The cases are In re: Bankrate Inc, SEC Administrative Proceeding, No. 3-16786; and SEC v. DiMaria et al, U.S. District Court, Southern District of New York, No. 15-07035.