The US Securities and Exchange Commission has fined mobile data analytics biz App Annie $10m for engaging in deceptive practices and making material misrepresentations about how its alternative data was derived.
The vendor has agreed to settle the case "without admitting or denying the findings in the SEC's order," according to a statement on the company's website.
The SEC order found that App Annie and founder Bertrand Schmitt understood that companies would only share their confidential app performance data with App Annie if it promised not to disclose their data to third parties. App Annie and Schmitt then assured companies that their data would be aggregated and anonymised before being used by a statistical model to generate estimates of app performance.
However, the order alleged that from late 2014 through to the middle of 2018, App Annie used non-aggregated and non-anonymised data to alter its model-generated estimates to make them more valuable to sell to trading firms.
Meanwhile, App Annie and Schmitt misrepresented to trading firm customers the estimates in a way that was consistent with the consents it obtained from companies that shared their confidential data, according to the SEC's order. The body added that App Annie and Schmitt had been aware that trading firm customers were making investment decisions based on these estimates.
"The federal securities laws prohibit deceptive conduct and material misrepresentations in connection with the purchase or sale of securities," said Gurbir Grewal, director of the SEC's Enforcement Division. "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."
In a statement, App Annie said the investigation "did not relate to our current products, nor did it relate to our current relationships with customers," that is, since mid-2018.
It said the company had made changes over the past three years including appointing a new CEO (Theodore Krantz) and executive team, changing how it builds data estimates, creating a "company-wide culture of compliance" and "codification of procedures to ensure the exclusion of all confidential public company data" from its processes. ®