An analytics business app called App Annie was fined by the United States Securities and Exchange Commission for engaging in deceptive practices and creating material misrepresentation as to how they were able to service its alternative data from years ago.
Apparently, App Annie has agreed to settle the case “without admitting or denying the findings in the SEC’s order”, as per a statement posted on its website.
It’s said that the SEC was able to find that App Annie and Bertrand Schmitt, its founder, had an understanding that companies would only share their confidential app performance data if it assures them not to share said data to third-party entities.
The company and its founder then promised the companies that their data will be anonymized and aggregated before a statistical model can use it to generate app performance estimates.
However, SEC alleges that App Annie failed to deliver such promises as they altered its model-generated estimates from late 2014 to mid-2018 to make them more profitable to sell to trading firms.
The SEC order added that App Annie and Schmitt misrepresented the estimates to its trading firm users in a way that’s consistent with the consents it obtained from companies who shared their confidential data.
Both App Annie and Schmitt were apparently aware that trading firms using the service are using their estimates to make investment decisions.
“The federal securities laws prohibit deceptive conduct and material misrepresentations in connection with the purchase or sale of securities,”
“Here, App Annie and Schmitt lied to companies about how their confidential data was being used and then not only sold the manipulated estimates to their trading firm customers, but also encouraged them to trade on those estimates – often touting how closely they correlated with the companies’ true performance and stock prices.”Director Gurbur Grewal, SEC Enforcement Division
App Annie, in a statement, said that the investigation “did not relate to our current products, nor did it relate to our current relationships with customers,” — at least since mid-2018.
Since the past three years, the company claims that they have already made changes and even appointed a new CEO, Theodore Krantz, formed a new executive team, changed how it builds data estimates, and more.
Via: The Register