UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

Release No. 9901 / September 8, 2015

SECURITIES EXCHANGE ACT OF 1934

Release No. 75849 / September 8, 2015

ACCOUNTING AND AUDITING ENFORCEMENT

Release No. 3683 / September 8, 2015

ADMINISTRATIVE PROCEEDING

File No. 3-16786

In the Matter of

BANKRATE, INC., 

Respondent.

ORDER INSTITUTING CEASE-ANDDESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933 AND SECTION 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934,

MAKING FINDINGS, AND IMPOSING

CEASE-AND-DESIST ORDER AND CIVIL 

PENALTY

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate that ceaseand-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”), against Bankrate, Inc. (“Bankrate” or “Respondent”). 

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Ceaseand-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of 

the Securities Exchange Act of 1934, Making Findings, and Imposing Cease-and-Desist Order and 

Civil Penalty (“Order”) as set forth below. 
2

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1that: 

SUMMARY

This proceeding results from Bankrate, through its chief financial officer, Edward DiMaria, 

vice president and director of accounting, Matthew Gamsey, and vice president of finance, Hyunjin 

Lerner, intentionally manipulating its financial results for the second quarter of 2012 in order to 

meet and/or exceed analyst consensus estimates for key financial metrics. As a result of this 

manipulation, Bankrate materially overstated its financial results for the second quarter of 2012. 

After reviewing Bankrate’s preliminary financial results for the second quarter 2012, which 

fell short of analyst estimates for certain key metrics, DiMaria arbitrarily decided to increase 

Bankrate’s revenue following the end of the quarter in order to meet those metrics. As a result, 

DiMaria, through Lerner, improperly directed two Bankrate divisions, the Insurance and Credit 

Cards divisions, to book additional revenue of $300,000 and $500,000, respectively, without any 

support or analysis. 

The Insurance division immediately booked the $300,000 of revenue directed by DiMaria 

to a dormant customer account, with no intention of justifying the revenue until the company’s 

outside auditor asked for additional information about it five days later. In response to the 

auditor’s inquiry, the Insurance division quickly devised a purported justification for the

improperly booked revenue – a justification that changed shortly thereafter. These purported 

justifications were not, however, provided to Bankrate’s auditor. Instead, Lerner sent a misleading, 

generic explanation to the auditor – an explanation that was reviewed and approved by DiMaria 

and Gamsey. Further, although the Insurance division’s ultimate justification was reviewed and 

approved by DiMaria, Gamsey, and Lerner, the three most senior employees in Bankrate’s 

accounting department, each of them knew, or was reckless in not knowing, that the purported 

justification did not support the recognition of revenue under Generally Accepted Accounting 

Principles (“GAAP”). 

The accountants from the Credit Cards division were only willing to record $176,000 of the 

$500,000 in revenue directed by DiMaria, thereby infuriating DiMaria. Refusing to accept the

Credit Cards division’s unwillingness to record the full $500,000 of revenue he had directed, 

DiMaria insisted that the approximate difference be recorded as revenue on the books of 

Bankrate’s mortgage business, Bankrate Core. As a result, Bankrate recorded an additional 

$305,000 of unsupported revenue to two arbitrary Bankrate Core customers. After learning of the 

Commission staff’s investigation in this matter, DiMaria further attempted to conceal this fraud by 

retroactively attributing this revenue to a purported contractual dispute with an Insurance division

 

1

 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 
3

customer. In fact, this dispute had been resolved several months earlier. In addition, Bankrate’s 

recording of both the $176,000 and the $305,000 in revenue was contrary to GAAP.

Further manipulating Bankrate’s financial results for the second quarter, DiMaria, without 

any support or analysis, improperly directed a Bankrate Core accountant to reduce the accrual for 

certain marketing expenses by $400,000. Bankrate, through DiMaria and with Lerner’s 

knowledge, had been allowing this marketing accrual account to accrue as a “cushion” account for 

more than a year, and then selectively decided to reduce the accrual in the second quarter of 2012 

in order to improve the company’s financial results. In the second quarter 2012, DiMaria 

improperly reversed $400,000 of the accrual amount, thereby reducing second quarter expenses, to 

help Bankrate meet analyst estimates. Finally, as part of its effort to artificially inflate its financial 

results to meet or exceed analyst estimates for the second quarter 2012, Bankrate intentionally 

failed to book approximately $99,000 in known accounting expenses that had been incurred in the 

second quarter. 

As a result of these improper accounting entries, entries that the company reversed as part 

of a broader restatement on June 17, 2015, Bankrate’s second quarter 2012 earnings release and 

associated Form 8-K, filed on July 31, 2012, reported adjusted earnings before interest, taxes, 

depreciation, and amortization (“Adjusted EBITDA”) of $37.5 million, exceeding analyst 

consensus estimates by approximately $300,000, and adjusted earnings per share (“Adjusted EPS”)

of $0.18, thereby meeting analyst consensus estimates.2Further, due to these improper accounting

entries, Bankrate materially overstated its second quarter 2012 net income reported in its Form 10-

Q filed on August 13, 2012. During the two week period following the issuance of Bankrate’s 

second quarter 2012 earnings release, DiMaria and Lerner each sold Bankrate stock, thereby 

profiting from a stock price that had been artificially inflated by the company’s materially 

overstated financial results. 

RESPONDENT

1. Bankrate, Inc. is a Delaware corporation based in North Palm Beach, Florida, that 

owns and operates an Internet-based consumer banking and personal finance network. Bankrate’s 

common stock is registered with the Commission pursuant to Exchange Act Section 12(b) and

traded on the New York Stock Exchange (ticker: RATE). Bankrate files periodic reports, 

including Forms 10-K, 10-Q, and 8-K, with the Commission pursuant to Section 13(a) of the 

Exchange Act and the related rules thereunder. On June 17, 2011, Bankrate filed an S-8 

registration statement for an offering relating to its equity compensation plan. This offering, which 

was ongoing at the time of the misconduct described herein, incorporated future company filings 

with the Commission, including the Form 8-K containing the company’s materially false second 

quarter 2012 earnings release and the second quarter 2012 Form 10-Q that materially overstated 

the company’s net income.

 

2 Bankrate defines Adjusted EBITDA as earnings before interest, taxes, depreciation and 

amortization, excluding stock based compensation expense and IPO and deal related expenses, 

and defines Adjusted EPS as earnings per fully diluted share, excluding stock based 

compensation expense, amortization, IPO and deal related expenses. 
4

FACTS

Bankrate’s Business And Structure.

2. Bankrate is engaged in the business of providing consumers with personal finance 

information across multiple vertical categories including mortgages, deposits, insurance, credit 

cards, and other categories, such as retirement, automobile loans, and taxes. Bankrate also 

aggregates rate information from over 4,800 institutions on more than 300 financial products. Its 

principal platform is its Bankrate.com Internet website.

3. During the relevant period, Bankrate had three primary divisions: (1) Bankrate 

Core, the original mortgage information business; (2) Bankrate Insurance, comprised of numerous 

insurance information companies acquired by Bankrate; and (3) Bankrate Credit Cards, comprised 

of a number of credit card information companies acquired by Bankrate. 

4. Bankrate generates revenue by selling consumer information (“leads”) gleaned 

from users of its websites in the insurance and credit cards vertical categories. Its other sources of 

revenue include display advertising, performance-based advertising, distribution arrangements, and 

traditional media avenues, such as syndication of editorial content and subscriptions. Some of its 

customers pay Bankrate each time that a consumer clicks through a link on Bankrate’s website to 

the customer’s website. 

Bankrate’s Manipulation Of Second Quarter 2012 Revenue and Expenses.

5. On July 6, 2012, after being provided with preliminary second quarter financial 

results for Bankrate Core and Credit Cards (the Insurance division’s financial results had not yet 

been added to the consolidated numbers), DiMaria, unwilling to accept the company’s second 

quarter 2012 financial results, informed Lerner that Adjusted EBITDA needed to be $37 million 

for the quarter. 

6. On July 7, 2012, the first version of Bankrate’s consolidated financial results was

circulated to DiMaria, Lerner, and Gamsey, as well as others on the accounting team, reflecting

current Adjusted EBITDA for the second quarter of $36,144,000, which DiMaria knew was below 

analyst consensus estimates. 

7. Three days later, after realizing it had double-counted $286,000 of revenue, the 

Credit Cards division submitted revised financials for consolidation. The next day, DiMaria was 

informed that Bankrate’s second quarter revenue had decreased by $286,000 due to the correction 

for the Credit Cards division’s double-counting of revenue, further jeopardizing the company’s 

prospects of meeting its metrics. Shortly thereafter, at DiMaria’s instruction, Lerner emailed the 

Insurance and Credit Cards divisions directing them to book additional revenue of $300,000 and

$500,000, respectively. Lerner’s July 11, 2012 email instructions to both Credit Cards and 

Insurance, which were copied to DiMaria, did not specify a legitimate justification for the revenue, 

but rather contained an ambiguous description of what the revenue purportedly related to, and did 

not identify any specific customers with which it was associated. 
5

8. Within a few minutes of sending these email instructions, Lerner forwarded the 

emails (and subsequent related emails) to Gamsey. In emails between themselves using strong 

expletives, Lerner and Gamsey expressed serious concerns about the validity of the revenue the 

divisions had just been directed to book and commiserated about the improper accounting entries

directed by DiMaria. Their emails also stated that DiMaria’s improper accounting entries would 

have to be reversed in the third quarter, thereby creating an even larger revenue shortfall and a 

need to record additional improper revenue in the third quarter. 

Bankrate Insurance Records $300,000 in Baseless Revenue.

9. Without any support or analysis, the Insurance division immediately recorded the 

$300,000 of additional revenue directed by DiMaria, booking the revenue to a dormant customer

account. Although the Insurance division did not have any intention of justifying the $300,000 of 

additional revenue, on July 16, 2012, five days after the revenue was booked, Bankrate’s auditors 

asked for an explanation for the $300,000 as part of its accounts receivable variance review, 

thereby prompting Bankrate to quickly create a purported explanation for this revenue. 

10. Within twenty-four hours of Bankrate’s auditors asking about the $300,000 entry, 

the Insurance division, with the knowledge and/or involvement of DiMaria, Lerner, Gamsey, and 

others, prepared a draft chart purportedly supporting the $300,000 in revenue – a chart that was 

changed shortly thereafter. Tellingly, although this second chart changed the amounts of revenue 

assigned to certain categories and replaced certain initial explanations for the revenue with new 

purported explanations for the revenue, the second chart still totaled the $300,000 in revenue that 

DiMaria and Lerner had directed the Insurance division to book. 

11. The purported explanations for the $300,000 in revenue were baseless. For 

example, in the second purported explanation for the $300,000 in revenue, $179,000 related to 

estimated June 2012 revenue from a brand new bonus provision with a customer of the Insurance 

division. However, as DiMaria, Gamsey, and Lerner knew, at the time this revenue was 

recognized, the Insurance division did not have any actual data from the customer indicating that a 

June bonus had been earned. In addition, both Gamsey and Lerner knew that the Insurance 

division was not performing at a level that would have triggered a bonus in the months leading up 

to June 2012. Similarly, DiMaria knew, or was reckless in not knowing, that a few weeks prior to 

the purported justification attributing $179,000 to this bonus, the Insurance division had estimated 

only a medium probability of a $30,000 bonus by August 2012. Indeed, the Insurance division 

employee who prepared the high-level, conclusory “support” for the bonus revenue advised Lerner 

at the time that she was not comfortable with the Insurance division recognizing revenue on the 

basis of this type of analysis in the future. When the actual data on which a potential bonus was 

based were later reported to the Insurance division, the Insurance division’s performance did not

qualify for a bonus. In fact, the Insurance division missed the bonus under the two applicable 

bonus formulas by approximately 50% and 200%, respectively. 
6

12. For these reasons, among others, Bankrate’s recognition of the $300,000 in revenue 

was contrary to GAAP. 3

13. In addition, Bankrate did not share either of the purported explanations for the 

$300,000 in revenue with its auditor, despite the auditor specifically asking for information about 

the $300,000. Rather, at approximately the same time the initial chart attempting to explain the 

$300,000 entry was being circulated internally, Lerner sent a misleading, generic explanation that 

had been reviewed and approved by DiMaria and Gamsey to the auditor, implicitly affirming that 

the revenue was associated with the single customer account to which it was booked. Moreover, 

Bankrate did not forward either chart to its auditor, nor did Bankrate update its misleading, generic 

explanation for the $300,000 in revenue. 

Credit Cards Does not Fully Comply with the Directive to Book Baseless Revenue, Causing 

Bankrate to Immediately and Arbitrarily Record Revenue to A Different Business Unit.

14. Unlike Insurance, the Credit Cards accountants initially refused to book the 

$500,000 of unsupported revenue directed by DiMaria. Unwilling to accept, and angered by, the 

Credit Cards accountants’ reaction to his improper directive, 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.” 

15. Credit Cards personnel eventually recorded an additional $176,000 in revenue to 

the second quarter 2012, revenue that was contrary to Bankrate’s revenue recognition policy. On 

July 12, 2012, upon learning that Credit Cards had only booked $176,000 of the $500,000 in 

additional revenue he had directed, DiMaria informed Lerner that the difference should be booked 

to Bankrate Core. Thirty-five minutes later, Lerner instructed the Bankrate Core accounting 

personnel to book $305,000 in additional revenue. Conveniently using two of the Core customers 

on a revenue spreadsheet that had legitimate revenue listed as $234,000 and $71,000, Bankrate 

Core simply doubled the revenue attributable to these customers without any basis to arrive at the 

$305,000 of additional revenue, a fact that soon became known to DiMaria, Lerner, and Gamsey. 

16. By adding this improper revenue directly to the revenue spreadsheet rather than 

through a manual journal entry, Bankrate avoided the questions that its auditors typically directed 

toward post-quarter manual journal entries. This manner of booking the $305,000 also 

circumvented Bankrate’s accounting controls, as the revenue spreadsheet had already been 

approved for entry into the general ledger and did not require additional approvals. 

 

3 The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 

(“ASC”) Topic 605-10-25-1 provides that revenue may be properly recognized only when it is 

both a) realized or realizable and b) earned. See also Staff Accounting Bulletin Topic 13, 

Revenue Recognition, as codified in ASC 605-10-S99, which provides that revenue is generally 

realized or realizable and earned when all of the following criteria are met: 1) persuasive 

evidence of an arrangement exists; 2) delivery has occurred or services have been rendered; 3) 

the seller’s price to the buyer is fixed or determinable; and 4) collectability is reasonably assured.
7

17. In approximately September 2012, after learning of the staff’s investigation in this 

matter, DiMaria for the first time attributed the $305,000 revenue item to an alleged contractual 

dispute with an Insurance customer. After DiMaria offered this justification, the $305,000 of 

previously unexplained revenue was transferred from Bankrate Core’s books to the Insurance

division’s books. 

18. Notwithstanding DiMaria’s retroactive justification of the $305,000, the alleged 

contractual dispute with the Insurance customer had been resolved by June 2012. In fact, in 

August 2012, Bankrate confirmed with the customer that the only outstanding money owed by the 

customer was for June and July 2012 invoices. 

19. For these reasons, among others, the recognition of both the $176,000 in revenue 

booked with the Credit Cards division and the $305,000 in revenue booked with Bankrate Core

was contrary to GAAP. 

Bankrate Makes Additional Baseless Reductions In Marketing Expense Accrual.

20. On July 13, 2012, the day after Bankrate improperly recorded $305,000 of 

additional revenue on Bankrate Core’s books, a revised version of Bankrate’s consolidated 

financial results for the second quarter 2012 was circulated to DiMaria, Lerner, and Gamsey that 

reflected Adjusted EBITDA of $36,656,000. 

21. Shortly after the circulation of the revised financial results, results that continued to 

fall short of the $37 million in Adjusted EBITDA dictated by DiMaria one week earlier, DiMaria

directed a Core accountant to reduce a marketing accrual account for Search Engine Marketing 

(known as “SEM”) by $400,000. Reducing the SEM accrual (a balance sheet account) led to a 

corresponding reduction in the SEM expense (an income statement account), thereby artificially 

increasing Bankrate’s quarterly earnings. 

22. DiMaria’s email instruction to the Core accountant did not reference or contain any 

support for the accounting entry. Similarly, the manual journal entry executing DiMaria’s 

instruction to reduce the SEM marketing accrual by $400,000 did not have any support beyond 

DiMaria’s email instruction. 

23. Upon learning of this $400,000 reduction in the SEM accrual, Gamsey questioned 

Lerner as to whether there was any basis for DiMaria’s reduction in the SEM accrual, or whether 

DiMaria directed this entry instead of additional unsupported revenue entries. 

24. In fact, Bankrate had been using the SEM accrual account as one of its “cushion” or 

“cookie jar reserve” accounts (i.e., an account known to have excess accruals that could be 

selectively used to boost the financial results of particular quarters) since at least early 2011. It was 

inappropriate for Bankrate to use the SEM account as a “cushion” account, and to reduce the SEM 

accrual without a proper basis, in order to meet the Adjusted EBITDA number being dictated by 

DiMaria. 
8

25. Following the booking of this $400,000 reduction in the SEM accrual, a revised 

version of Bankrate’s second quarter 2012 financial results was circulated to DiMaria, Lerner, and 

Gamsey, reflecting Adjusted EBITDA of $37,056,000. 

Bankrate Fails to Book Additional Second Quarter Expenses.

26. The baseless accounting entries detailed above were not the only steps in 

Bankrate’s scheme to meet analyst estimates. On July 6, 2012 – indeed, within a few hours of 

being told by DiMaria that second quarter Adjusted EBITDA needed to be $37 million – Lerner 

instructed Bankrate Core to reverse certain second quarter accounting fees associated with 

Bankrate’s Sarbanes-Oxley compliance provider. This instruction was made without any basis.

27. After realizing that accounting fees incurred in the second quarter had not yet been 

recorded, Lerner, instead of reversing these fees, decided not to record the proper amount of fees to 

the second quarter, but to instead record those fees to the third quarter. As a result, Bankrate 

improperly failed to book at least $99,000 in known accounting fees that were incurred during the 

second quarter. 

Bankrate’s Reported Financial Results Met And/Or Exceeded Analyst Consensus Estimates.

28. As a result of its improper entries as described above, Bankrate released artificially 

inflated financial results on July 31, 2012, and just met analyst targets. Analyst consensus 

estimates for Bankrate’s second quarter 2012 financial results were $37.2 million for Adjusted 

EBITDA and $0.18 for Adjusted EPS. In its July 31, 2012 earnings release, which was 

incorporated in a Form 8-K filed by Bankrate on the same date, Bankrate reported second quarter 

2012 Adjusted EBITDA of $37.5 million and Adjusted EPS of $0.18. The above-described 

improper entries were therefore material, as they allowed Bankrate to meet and/or exceed analyst 

consensus estimates for these key financial metrics. Due to the improper entries, Bankrate also 

materially misstated its reported net income in its second quarter 2012 Form 10-Q, filed on August 

13, 2012. 

29. The day after Bankrate’s announcement of its financial results for the second 

quarter 2012 on July 31, 2012, Bankrate’s stock price rose from $15.95 to $17.57 per share. Both 

DiMaria and Lerner sold Bankrate stock during the two-week period following the announcement 

of Bankrate’s second quarter 2012 financial results, a period during which Bankrate’s stock price 

was artificially inflated as a result of Bankrate’s scheme to inflate its financial results. 

VIOLATIONS

30. As a result of the conduct described above, Bankrate violated Section 17(a) of the 

Securities Act, which prohibits fraudulent conduct in the offer or sale of securities, and Section 

10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in 

connection with the purchase or sale of securities. 

31. Also as a result of the conduct described above, Bankrate violated Section 13(a) of 

the Exchange Act and Rules 13a-11, 13a-13, and 12b-20 thereunder, which require that every 

issuer of a security registered pursuant to Section 12 of the Exchange Act file with the 
9

Commission, among other things, information, documents, quarterly reports, and current reports as 

the Commission may require, and mandate that periodic reports contain such further material 

information as may be necessary to make the required statements not misleading. 

32. Because Bankrate improperly recorded its revenue, expenses, and accruals, its 

books, records, and accounts did not, in reasonable detail, accurately and fairly reflect its 

transactions and dispositions of assets.

33. In addition, Bankrate failed to implement internal accounting controls relating to its 

revenue, expense, and accrual accounts which were sufficient to provide reasonable assurances that 

these accounts were accurately stated in accordance with GAAP.

34. As a result of the conduct described above, Bankrate violated Sections 13(b)(2)(A) 

and 13(b)(2)(B) of the Exchange Act, which require reporting companies to make and keep books, 

records and accounts which, in reasonable detail, accurately and fairly reflect their transactions and 

dispositions of their assets, and to devise and maintain a system of internal accounting controls 

sufficient to provide reasonable assurances that transactions are recorded as necessary to permit 

preparation of financial statements in accordance with GAAP. 

Bankrate’s Remedial Efforts

In determining to accept Bankrate’s Offer, the Commission considered remedial acts 

undertaken by Bankrate. 

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent Bankrate’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 

Respondent Bankrate cease and desist from committing or causing any violations and any future 

violations of Section 17(a) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(A), and 

13(b)(2)(B) of the Exchange Act, and Rules 10b-5, 12b-20, 13a-11, and 13a-13 thereunder. 

B. Respondent Bankrate shall, within 14 days of the entry of this Order, pay a civil 

money penalty in the amount of $15,000,000 to the Securities and Exchange Commission. The 

Commission may distribute civil money penalties collected in this proceeding if, in its discretion, 

the Commission orders the establishment of a Fair Fund pursuant to 15 U.S.C. § 7246, Section 

308(a) of the Sarbanes-Oxley Act of 2002, as amended. The Commission will hold funds paid 

pursuant to this paragraph in an account at the United States Treasury pending a decision whether 

the Commission, in its discretion, will seek to distribute funds or, subject to Exchange Act Section 

21F(g)(3), transfer them to the general fund of the United States Treasury. If timely payment is not 

made, additional interest shall accrue pursuant to 31 U.S.C. §3717. Payment must be made in one 

of the following ways: 
10

(1) Respondent may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov through the 

SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United States 

postal money order, made payable to the Securities and Exchange Commission and 

hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying 

Bankrate as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to Ian Karpel, Assistant Regional Director,

Division of Enforcement, Securities and Exchange Commission, 1961 Stout Street, Denver, CO 

80294-1961. 

C. Regardless of whether the Commission in its discretion orders the creation of a Fair 

Fund for the penalties ordered in this proceeding, amounts ordered to be paid as civil money 

penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, 

Respondent agrees that in any Related Investor Action, it shall not argue that it is entitled to, nor 

shall it benefit by, offset or reduction of any award of compensatory damages by the amount of any 

part of Respondent’s payment of a civil penalty in this action (“Penalty Offset”). If the court in 

any Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 

days after entry of a final order granting the Penalty Offset, notify the Commission's counsel in this 

action and pay the amount of the Penalty Offset to the Securities and Exchange Commission. Such 

a payment shall not be deemed an additional civil penalty and shall not be deemed to change the 

amount of the civil penalty imposed in this proceeding. For purposes of this paragraph, a “Related 

Investor Action” means a private damages action brought against Respondent by or on behalf of 

one or more investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding.

By the Commission.

Brent J. Fields

Secretary