The hottest debate in the stock market right now was actually started by Donald Trump in 1999

Donald Trump is a lot of things.

Right now, he's mostly known as Republican presidential frontrunner.

But back in 1999, Trump's company - Trump Hotels & Casino Resorts - was the first company to end up on the wrong side of the SEC's view on how companies should be "adjusting" their earnings.

Right now, the big debate in markets is how much company's are really earning.

When a company reports earnings they typically present investors with a series of numbers.

These are most easily broken down to GAAP and non-GAAP figures. GAAP numbers comply with Generally Accepted Accounting Principles, with this figure typically reflecting earnings (or losses) divided by shares outstanding.

A growing trend among US corporates, though, has seen earnings increasingly leave stuff out - either good or bad - with managements opting to give what, in their view, is a cleaner picture of their quarterly performance.

These numbers are often called "adjusted" or "pro forma" earnings and are what Wall Street analysts typically use to build their estimates. The debate on this is sort as much a philosophical one as it is about the math. (Who is to say what a company is really worth, and so on.)

So but the point here is that the SEC eventually found that Trump Hotels' third-quarter earnings release from 1999, "cited pro forma figures to tout the Company's purportedly positive results of operations but failed to disclose that those results were primarily attributable to an unusual one-time gain rather than to operations."

The problem with what Trump Hotels did in 1999, then, is not that it excluded too much bad stuff but it did not exclude some good stuff.

The earnings in question excluded an $81.4 million one-time charge. These earnings did not, however, include that the company also recorded a one-time gain of $17.2 million.

As a result, Trump Hotels' earnings beat expectations and the stock gained more than 7%.

But as the SEC notes, the company marketed this earnings beat as the result of improved operations when it was, in the SEC's view, the result of intentionally misleading accounting.

In hindsight this seems pretty straightforward: if you want to adjust your earnings you can't have your cake and eat it, too.

Take out bad stuff, sure. The good stuff goes, too.

And, in hindsight, as now seems inevitable, Donald Trump was creating controversy.

(via WSJ's Michael Rapoport)