Because it loses tons of money, Groupon is promoting its IPO using an inflated income number that excludes marketing and customer acquisition costs. Why would you do that? Well, that's exactly what the SEC is now asking.

Groupon's calls its inflated income number "CSOI," or consolidated segment operating income, and no one else has heard of CSOI before. So the Securities and Exchange Commission has begun asking the company about this weird bizarre world it has constructed in which two of its biggest expenses do not count, a source tells the Wall Street Journal. This is a very good thing to ask about, given that Groupon's 2010 operating loss of $420 million was driven by $481 million of the very expenses excluded from CSOI. If you look at Groupon's accounting by generally accepted principles the online coupon firm spends $1.43 to make $1, has losses that are mounting rather than improving, and desperately needs cash from its IPO because it spent most of its last funding round on bonuses for CEO Andrew Mason and his backers.

Given its distinguished history of gutting the prosecution of Wall Street crime, letting investment banks self police themselves into financial crisis, and ignoring mammoth scams even when repeatedly handed well drawn maps to them, we'd expect the SEC to politely thank Groupon for answering its questions and allow it to proceed with business as usual. Mason won't even have to deploy his infamous, creepy death stare.

[Photo of Andrew Mason via Getty]