Salty Emails Keep Execs in SEC’s BankRate Stew

MANHATTAN (CN) — Bankrate has already forked over a $15 million settlement with the government, but its former top executives say regulators cannot prove any intent to cook the books.

A federal judge found Thursday, however, that the financiers' salty email threads bring some sizzle to the Securities and Exchange Commission's claims.

The SEC accuses former Bankrate CFO Edward DiMaria and accounting director Mathew Gamsey of having "fostered a corporate culture ... that condoned using improper accounting techniques to achieve financial targets."

Citing DiMaria's habit of using expense accounts to "tune" the company's numbers with financial targets, regulators nicknamed Bankrate's over-accruing practice "Ed's cushion."

When DiMaria reached for that cushion in 2012, according to the SEC's complaint, financial results came back "slightly below" analyst consensus estimates, and DiMaria ordered the company's vice president of finance Hyunjin Lerner to book $300,000 to the insurance division and $500,000 to the credit cards division.

Lerner settled her charges for $180,045 last year, on the same day as Bankrate's deal was announced.

Regulators say that Gamsey, the accounting director, flipped out when Lerner told him about DiMaria's instructions.

"F[***] me — seriously — oyyyyyyyyyyyyyy ... You better make sure that the revenue/margin analytics are thoroughly explained so that we avoid questions on this sh[**]."

That email, like all of the messages quoted in Thursday's ruling, is censored in court papers.

"[DiMaria] said there may be some additional good guy adjustments coming," Gamsey's email continues, "and I f[***]ing knew that he was going to do something like this. We need to be very careful how this gets reflected or be able to have some basis for the estimate to show [the auditor] if they happen to figure it out."

When DiMaria learned that the company's credit card division resisted his directive, the SEC says he had his own choice words.

DiMaria told other Bankrate personnel that he was "going to rip [the credit cards CEO's] f[***]ing head off" and fire the credit cards accountants if they "f[***] up the accounting," according to the ruling.

The CFO urged the court not to read too much in his "colorful emails," which he acknowledged showed "frustration and poor communication." But DiMaria insisted that he had no reason to believe that the revenue wasn't in line with generally accepted accounting principles.

He insisted that his email simply pushed the credit cards division's numbers cruncher to "make sure the accounting was correct."

U.S. District Judge Gregory Woods smirked at the theory.

"That is one possible explanation for the email and alleged events, and DiMaria will have the opportunity to present his interpretation to a finder of fact later in this litigation," the ruling states.

For now, the case will move on to discovery on all claims, except for one against Gamsey, which did not allege that he obtained any money or property from the conduct.

Neither the SEC nor the attorneys for the men have answered requests for comment.

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