According to the SEC, the company, which sells estimates on app downloads, usage and revenue, assured app businesses that the performance data they shared with App Annie would only be used in an anonymized way and run through an algorithm to generate performance estimates. But the SEC accuses App Annie and its former CEO and Chairman Bertrand Schmitt of reneging on that promise and using actual performance data to tweak its estimate models between 2014 and 2018. Then, the SEC alleges, the company sold that confidential data to trading firms, and misled those customers into thinking that the data was compliant with federal securities laws.
"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," Gurbir S. Grewal, director of the SEC's Enforcement Division, said in a statement.
In addition to the $10 million settlement, Schmitt is required to pay $300,000 and is barred from serving as a director or officer of any public company for three years.
App Annie said Tuesday that it had made "a number of material changes" in recent years, including appointing a new CEO and a head of compliance. In a statement to Protocol, Theodore Krantz, App Annie's current CEO, used the opportunity to call for stricter regulation of the entire industry. "Many businesses may be unknowingly leveraging data reliant on confidential public company information without explicit consent which we believe puts companies using digital/mobile market data at significant risk," Krantz said. "It is our opinion that the entire alternative data space needs to be regulated."
