regulation
Bulletins

SEC charges App Annie with securities fraud in $10 million settlement

The data provider will pay $10 million to settle the case.

SEC headquarters in Washington

SEC headquarters

Photo: Saul Loeb/AFP via Getty Images

The SEC announced Tuesday that it's charging App Annie, the mobile app data provider, with securities fraud, accusing the company of "engaging in deceptive practices" and misrepresenting the origins of its data. App Annie will pay a $10 million settlement, according to the announcement, although the company has not admitted to any of the SEC's findings.

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."

Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

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