Cramer's Charged With Accounting Fraud

Tyler Durden's picture

Over two years ago, while scouring through's filing we stumbled upon something interesting: "As a result of the need for the Company and its independent registered public accounting firm to focus attention on matters related to the Company's previously-announced review of the accounting in its former subsidiary, which subsidiary the Company sold in December 2009 -- including matters related to the preparation and filing by the Company in February 2010 of a Form 10-K/A for the year ended December 31, 2008, a Form 10-Q/A for the quarter ended March 31, 2009 and Forms 10-Q for the quarters ended June 30, 2009 and September 30, 2009, respectively, and matters related to an investigation commenced by Securities and Exchange Commission in March 2010 -- the Company requires additional time  to prepare its financial statements, assess its internal controls and file its Form 10-K for the year ended December 31, 2009 ("2009 Form 10-K")." Oops. We can't wait to see how Mr. Cramer will explain to the Mad Money faithful this particular twist on the hangover of the show's five year birthday bash. Also, we wonder if CNBC will finally cancel the ludicrous Jim "truth" Cramer campaign once this news breaks. We doubt it- in the quest for evaporating eyeballs, all is fair." This was in April 2010. Today, we got resolution on the matter, as the SEC finally has put the matter to close.

From the SEC:

SEC Charges Financial Media Company and Executives Involved in Accounting Fraud

Washington, D.C., Dec. 18, 2012 — The Securities and Exchange Commission today charged a digital financial media company and three executives for their roles in an accounting fraud that artificially inflated company revenues and misstated operating income to investors.

Additional Materials

The SEC alleges that TheStreet Inc., which operates the website, filed false financial reports throughout 2008 by reporting revenue from fraudulent transactions at a subsidiary it had acquired the previous year.  The co-presidents of the subsidiary – Gregg Alwine and David Barnett – entered into sham transactions with friendly counterparties that had little or no economic substance.  They also fabricated and backdated contracts and other documents to facilitate the fraudulent accounting.  Barnett is additionally charged with misleading TheStreet’s auditor to believe that the subsidiary had performed services to earn revenue on a specific transaction when in fact it did not perform the services.  The SEC also alleges that TheStreet’s former chief financial officer Eric Ashman caused the company to report revenue before it had been earned.  

The three executives agreed to pay financial penalties and accept officer-and-director bars to settle the SEC’s charges.

“Alwine and Barnett used crooked tactics, Ashman ignored basic accounting rules, and TheStreet failed to put controls in place to spot the wrongdoing,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “The SEC will continue to root out accounting fraud and punish the executives responsible.”

According to the SEC’s complaints filed in federal court in Manhattan, the subsidiary acquired by TheStreet specializes in online promotions such as sweepstakes.  After the acquisition, TheStreet failed to implement a system of internal controls at the subsidiary, which enabled the accounting fraud. 

The SEC alleges that through the actions of Ashman, Alwine, and Barnett, TheStreet:

  • Improperly recognized revenue based on sham transactions.
  • Used the percentage-of-completion method of revenue recognition without meeting fundamental prerequisites to do so, including reliably estimating and documenting progress toward the completion of relevant contracts.
  • Prematurely recognized revenue when the subsidiary had not performed actual work and therefore had not really earned the revenue. 

According to the SEC’s complaint, when the subsidiary’s financial results were consolidated with TheStreet’s financial results for financial reporting purposes, the improper revenue on the subsidiary’s books resulted in material misstatements in the company’s quarterly and annual reports for fiscal year 2008.  On Feb. 8, 2010, TheStreet restated its 2008 Form 10-K and disclosed a number of improprieties related to revenue recognition at its subsidiary, including transactions that lacked economic substance, internal control deficiencies, and improper accounting for certain contracts. 

Ashman agreed to pay a $125,000 penalty and reimburse TheStreet $34,240.40 under the clawback provision (Section 304) of the Sarbanes-Oxley Act, and he will be barred from acting as a director or officer of a public company for three years.  Barnett and Alwine agreed to pay penalties of $130,000 and $120,000 respectively, and to be barred from serving as officers or directors of a public company for 10 years.  Without admitting or denying the allegations, the three executives and TheStreet agreed to be permanently enjoined from future violations of the federal securities laws. 

The SEC’s investigation was conducted by Senior Counsel Maureen P. King and Staff Accountant Nandy Celamy of the New York Regional Office.  Aaron Arnzen served as Senior Trial Counsel in the matter. 

* * *

How totally shocking...

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Harbanger's picture

Probably sippin cognac somewhere in the Hamptons.

Disenchanted's picture



Jim Cramer is shocked...shocked that this was going on @ The Street dot con


Years later, in a venue he apparently did not anticipate would become public, Jim described how he really felt about those compliant analysts and reporters he manipulated artfully and with such apparent ease. Here is a transcript of the event. For the full video, see here. Or, just go here and pick whichever part of the video grabs you. It matters not where you start it, as throughout it Jim Cramer displays his comfort with stock manipulation in ways that he claims no no one else will admit, but which are illegal and beyond the capacity of the SEC to grasp, as he sees it. Also throughout it Jim displays his thorough comfort at fleecing the rubes (that is, cheating other market participants by manipulating stocks): in fact, the video is an exercise in Jim’s pride in that direction.

larz's picture

Are you sure? There was no mention of this on Mad Money what gives?

dirtbagger's picture

Watch Cramer with the sound on mute.  A shifty eyed SOB

Bastiat009's picture

Cramer is not better than the rest but he is not worse. He is very bad like all the people who make only predictions and are never held accountable for them.

Cramer: buy Bearn Stearns.

Gold lover: QE is positive.

Politicos: Bernanke rocks.

Many people: real estate is a good investment.

More people: debt is wealth.

This is the world we live in folks. Accept it or change it.

TWSceptic's picture

Gold lover: QE is positive.


It is, have you been asleep the last decade? Just because there's some technical selling / fiscal cliff pressure doesn't mean that QE won't be positive for PM in the coming years. No asset goes up in a straight line. You never seem to post on a rally.

Bastiat009: money printing is bad for metals.

Harbanger's picture

Money printing is bad for the USD. interesting how the USD is weaker and so is paper gold, I think their selling off paper to catch the rally. The market is rallying because they're pricing in the "fix" for the fiscal cliff, it won't last.  In the near future, comes the sell off, and the overcorrection until the next "fix" is announced, we've this before.  Consider these downturns in PM's a gift, in the long term the stock markets are overpriced when compared to our growth. We never allowed the markets to correct. I think when everyone realizes this, pm's and commodities will go thru the roof.

Rathmullan's picture

"OORAH" big shout out to all you jimmy wannabee students  of "THE ohio state university.

buzzsaw99's picture

Typical punishment. Thirty lashes with a wet noodle.

ZippyBananaPants's picture

Cramer can lick my balls!


JustObserving's picture

Jim Cramer has always been a criminal.  Has always been.


In recent weeks, “The Daily Show”’s Jon Stewart has exposed TV personality Jim Cramer as a liar (see these recent clips, 1 2 3). But I think he’s worse: I think he’s a criminal.

If that sounds hard to believe, please see this video (which Jim did not expect to reach the public) of Jim Cramer bragging about using the press to manipulate the stock market illegally. For a full analysis of the career of Jim Cramer, please read my essay: “Jim Cramer is a Complicated Man.”

Warren Buffet says that, “If you ever sit down at a poker table and in 15 minutes haven’t figured out who the pigeon is, you’re the pigeon.” Similarly, if you are getting any advice from Jim Cramer or CNBC, you are the pigeon. CNBC is a 24/7 hedge fund infomecial designed to trick you into making bad investments for the benefit of hedge funds. Again, watch the tape of Jim. Then read the critique. Then turn off CNBC.

therearetoomanyidiots's picture

" Jim Cramer bragging about using the press to manipulate the stock market illegally'

So what, the government does this all the time, with the market, with the insider trading perpetrated by congresspeople, with the jobs numbers, the Corzines, the Geithners, the Diamonds.   You going to make this guy hang when huge abuses of the aforementioned political and economic elite dwarf him?


I say JAIL JAIL JAIL for em all.

stant's picture

madmoney you cant afford to watch it

gwar5's picture

Leonard the Monkey still has better returns and has never been charged.


mktsrmanipulated's picture

call cnbc demand a story or interview with Jim 201 735 2622

surf0766's picture

He is partly responsible for the crash. That tv rant about they know nothing looked like it was intentional to push the market down and elect BO.



NoDebt's picture

Rogue trader!  Rogue trader!

Proof that Jimmy boy is definitely a "little fish" in the financial world..... he got pinched.  Only little fish have to endure the slings and arrows of the SEC.  Steal big, or go home. 


jjsilver's picture

Cramer is one of the boys, he probally didn't play ball on something and this is his thank you

madcows's picture

Phew! Now I won't need to see him screaming on tv.  In all reality he'll probably get off the hook.  He's probably haning in St. Somewhere with Corzine and a couple politicians right now.

NemoDeNovo's picture

FU Cramer I hope you and all your Cronies/Cheerleaders DIAF Bitch.

williambanzai7's picture

I did not inhale...

jubber's picture

Nothing less than the death sentence would be appropiate for him, preferably the Electric chair, there must be one a museum they could use.

therearetoomanyidiots's picture



Gypsyducks's picture

Where the FUCK is Jon Corzine?

ToNYC's picture

Stephanie Link, the new Fast Money contributor (My name is Stephanie Link, I am Fast Money) is touted from thestreetdotcom. Does she have the scoop ready?

azzhatter's picture

I laugh at how this fucking twit drops to his knees everytime he finds a CEO willing to appear on his carnival hour. It's like desperation to prove he's one of the boys. The guy talks to his fanboys like he's a business expert and has never run anything even remotely associated with a business. I find this despicable twit insufferable and always hope for some terrible disease to attach itself to him. He used to suck on Corzine so much, I think Dimon got jealous.

Yen Cross's picture

 Five years was a good run for a reality T.V. show on CNBS, Jimmy... /sarc

Mr Lennon Hendrix's picture

Jersey Bore starring James J. Cramer

[fist pump]


chunga's picture

"No! No! No! thestreet is not in trouble."

Fuck you Cramer, you douche.

BigT4451's picture

Based on the responses, it doesn't look like many actually read the article (or understand accounting fraud).  It looks like the subsidiary purchased by The Street was the perpetrator.  Considering they were purchased, they were probably trying to influence their purchase price.

When reading this, I don't see how anybody could attribute this to Jim Cramer himself.  The Street is going to take the PR hit here, but they appear to be the victim if you actually read what was going on. 



mktsrmanipulated's picture

may I say from all my fellow zhedgies....FUCK YOU--- dont come on here and tell us we dont understand this or that...based on your keen observation what about their due diligence... GO FUCK YOURSELF

buzzsaw99's picture

The SEC alleges that TheStreet Inc., which operates the website, filed false financial reports throughout 2008 by reporting revenue from fraudulent transactions at a subsidiary it had acquired the previous year. 

dadichris's picture

roflmao - i should give you an upvote just for the entertainment value

mktsrmanipulated's picture

and by the way you pompous ass


"In 2009, Cramer received earnings of $461,276 from"

Dingleberry's picture

"Big T" you would make a fine bankster.....

gwar5's picture

Cramer forgot to pay protection money like Corzine.


Temporalist's picture

Andrew M. Calamari, Director of the SEC’s New York Regional Office

A squid catching a squid?  Must be a sign of the Mayan prophesy.

Ixtab (the goddess of hanging/suicide)

Mitnal (Mayan hell where wrongdoers are punished)

TheGardener's picture

Accounting fraud ? So paying each other 30 million on
a joint project in days were not legit revenues...
who would have thought ...

Inthemix96's picture

And the single most terrifying aspect of jim cramer is people believe him.  Normal folk, people who have no skin in the game believe every bullshit word he speaks.

Let that sink in, a good proportion of folk believe him.  In-fucking-credible?????????

ebworthen's picture

"Booyah Jimmy!  Thanks so much for helping us individual investors succeed and understand the markets!"


Bleat, bleat.

Dr. Engali's picture

I used to have clients come in and want to buy a stock because Cramer said buy..I would give them all the reasons to the contrary on why they shouldn't. Sure enough they would buy the stock and lose their ass, but wouldn't you know it they would be back in the very next week. It was unfuckingbelievable.

ToNYC's picture

Cramerica has nicely illustrated that TV viewers people will perform any repetitive losing routine behavior rather than independent thinking, which is the hardest work of all. Uncritical eyeballs are highly-prized and satisfied with approved disabled concepts and QE words, now including qualitative metrics in the eye of the beholder.

Steak's picture

Hi ZHers, its meat again.

As a foil to the manic Cramer, here is a youtube playlist of the seminal chill album Far Away Trains Passing By - Ulrich Schnauss

Pleasant listening!

Texas Ginslinger's picture

Stewart also discussed how short-selling was detrimental to the markets and investors. Cramer admitted to Stewart that short-selling was detrimental, stated his opposition to it, and claimed that he had never engaged in it, which contradicts earlier statements in which he described going short while managing a hedge fund. In a December 2006 interview from's "Wall Street Confidential" webcast Cramer said, "A lot of times when I was short at my hedge fund...When I was positioned short—meaning I needed it down—I would create a level of activity beforehand that could drive the futures." He said, "I will say this: I am trying to expose this stuff, exactly what you guys do, and I've been trying to get the regulators to look at it." However, Stewart played several video clips from 2006 where Cramer discussed the spreading of false rumors to drive down stock prices and encouraged short-selling by hedge funds as a means to generate returns. At one point in a clip from December 22, 2006, he said, "I would encourage anyone in a hedge fund to do it." He called it a very quick way to make money and very satisfying. He continued, "By the way, no one else in the world would ever admit that, but I don't care, and again, I'm not gonna say it on TV."

 With that admission, why should anyone believe anything Jim Cramer says..???

ebworthen's picture

And of course, no jail time for anyone (that's for kids with that dangerous marijuana!).