SEC.gov | SEC Charges Puerto Rican Company and Managing Members with Fraud

The Securities and Exchange Commission today announced charges against Puerto Rico-based Back to Green Mining LLC and its two managing members, José Jiménez Cruz and Manuel Portalatin, for their participation in a fraudulent and unregistered offering in a purported "green" mining venture.

The SEC's complaint alleges that, from August 2016 until at least 2020, Back to Green, Jiménez, and Portalatin offered and sold to retail investors in Puerto Rico and at least five U.S. states the opportunity to share in the profits of a purported Colombian gold mining operation.  According to the SEC's complaint, the offering, which was not registered with the Commission, was part of a fraudulent scheme that raised approximately $2.7 million. Jiménez and Back to Green allegedly placed advertisements promising investors exorbitant returns and presented investors with materials that falsely stated that all permits necessary to mine in Colombia had been obtained. Subsequent to the provision of these materials, Portalatin allegedly signed contracts with investors when he knew that they had been misled.

"This case underscores our commitment to protecting retail investors from unregistered and fraudulent securities offerings that promise fantastic returns and mislead investors about the status of their projects," said Carolyn M. Welshhans, Associate Director of the SEC Enforcement Division. "We have alleged that Back to Green and Jiménez represented to investors that they would receive 40% returns per month, commencing within a few months, when the company was years away from selling anything for profit."

The SEC's complaint, filed in United States District Court for the District of Puerto Rico, charges Back to Green, Jiménez, and Portalatin with violating the antifraud provisions of the federal securities laws, as well as with directly offering and selling securities in an unregistered offering. The SEC seeks permanent injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties against Back to Green, Jiménez, and Portalatin.

Without admitting or denying the allegations in the SEC's complaint, Portalatin has offered to settle to permanent injunctions from future violations of the charged provisions and from participating in securities offerings not registered with the SEC, and to pay disgorgement of $605,462, plus prejudgment interest thereon in the amount of $64,312.25, and a civil penalty of $160,000. The settlement is subject to the approval of the district court.

The SEC's investigation was conducted by Michelle I. Bougdanos and Elisabeth M. Grimm and supervised by David Frohlich and Ms. Welshhans. The litigation will be led by Paul W. Kisslinger and supervised by Jan M. Folena. The SEC appreciates the assistance of Puerto Rico's Office of the Commissioner of Financial Institutions.

Read More

Tyler Tysdal - Business Broker

Tyler Tysdal is the world's best business broker. Tyler is the managing partner and cofounder at Freedom Factory. Tyler Tysdal Will Help You Sell Your Business in Huntington-Beach-California or anywhere else in the USA.

Contact Freedom Factory

Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
www.freedomfactory.com
Freedom Factory

Follow Tyler T. Tysdal Here

Read more from Tyler Tysdal on Google Sites
Check out Videos from Tysdal T. Tysdal on Vimeo.
Contact Tysdal

SEC.gov | Changing Dynamics Pre-IPO and Going Public on the Agenda for the SEC’s Small Business Capital Formation Advisory Committee

The Securities and Exchange Commission's Small Business Capital Formation Advisory Committee will meet virtually on Monday, Sept. 27 to explore the changing dynamics for pre-IPO companies raising capital and the pathways those companies take to becoming public.

During the morning session, the committee will focus on recent trends in "crossover investors"—such as mutual funds and other investors that traditionally focus on public companies—investing in late-stage, pre-IPO funding rounds. The committee will discuss how these investors are changing the dynamics of pre-IPO capital raising and the effects on timing to go public. During the afternoon session, the committee will explore pathways to joining the public markets, discussing how companies and investors are weighing traditional IPOs, direct listings, and the re-emergence of mergers with special purpose acquisition companies (SPAC). The full agenda for the meeting is available online, along with other meeting materials on the committee's webpage.

How to Listen: The committee meeting will take place from 10 a.m. to 2:30 p.m. ET and will be webcast live on SEC.gov. The webcast will be archived on the committee's webpage for later viewing. 

About the committee: The committee was established by Congress to provide the Commission with advice and recommendations on Commission rules, regulations, and policy matters relating to small businesses, from privately-held emerging companies to smaller public companies. The committee focuses its activities on pertinent rulemaking and policy priorities as well as emerging trends in capital raising, providing valued feedback into the regulatory process. Additional information on the committee, including its members, is available on the committee webpage.

Read More

Follow Tyler T. Tysdal Here

Read more from Tyler Tysdal at this website
Watch Videos from Tysdal T. Tysdal on Vimeo.
Follow Tyler Tysdal On Pinterest.com

SEC.gov | SEC, MSRB, FINRA to Hold Compliance Outreach Program for Municipal Advisors

The Securities and Exchange Commission's Division of Examinations and Office of Municipal Securities (OMS), the Municipal Securities Rulemaking Board (MSRB), and the Financial Industry Regulatory Authority (FINRA) today announced the opening of registration for the 2021 Compliance Outreach Program for Municipal Advisors. The virtual program will be held Thursday, Oct. 7, 2021, from 10 a.m. to 5 p.m. ET. Additional information and program materials, including the agenda are available on the SEC website.

The program will provide municipal advisors and other municipal market participants an opportunity to hear from SEC, MSRB, and FINRA staff on timely regulatory and compliance matters. Topics of discussion include managing conflicts of interest disclosures; operational considerations for registered municipal advisors; municipal advisors’ participation in new issue pricing; preparing for an examination; SEC and FINRA examination processes and common observations; and relevant SEC and FINRA enforcement actions. A tutorial on using the EDGAR system will also be presented.

"OMS is pleased to participate in this event for municipal advisors in the virtual format. We enjoy the opportunity to speak directly to and encourage a dialogue with the municipal advisor community. Our goal with this event is to promote a greater understanding of and compliance with municipal advisor duties under the federal securities laws," said OMS Director Rebecca Olsen.

Daniel Kahl, Acting Director of the SEC's Division of Examinations added, "I am delighted that we are once again holding this important outreach event. This program is one example of the Division's efforts to be transparent when it comes to the examination program and includes panels on common exam findings and how to prepare for an examination. With representatives of the SEC, MSRB, and FINRA, as well as industry participants, the program should provide an excellent learning opportunity for municipal advisors regarding their regulatory obligations from multiple perspectives. The open dialogue I expect at the event should serve to bolster compliance efforts and ultimately enhance investor protection."

MSRB Chief Regulatory Officer Gail Marshall said, "We are pleased to again partner with the SEC and FINRA on a program that allows us to engage with municipal advisors across the country. This program is a great capstone to the series of virtual regional town halls for municipal advisors that the MSRB held during the summer months. Creating opportunities such as this to engage in thoughtful dialogue will better inform our work that is centrally focused on reducing unnecessary costs and burdens for municipal advisors while also finding impactful ways to support compliance."

"The municipal securities market plays an important role in U.S. capital markets, providing opportunities for new and experienced retail investors as governments leverage bonds, complex structured products and financial derivatives to address their infrastructure and capital needs," said Bari Havlik, FINRA's Executive Vice President of Member Supervision.  "This program enables municipal advisor firms across the country to hear from regulators about areas of oversight, compliance and obligations that promote a fair and efficient market."

Registration is being administered by FINRA. The program is free and open to all. Register to attend the program here. For those who cannot attend the live virtual program, the recording will be archived on the SEC's Compliance Outreach Program for Municipal Advisors webpage for later viewing. To submit questions in advance of the event, email 2021MAOutreach@sec.gov.

Read More

Follow Tyler T. Tysdal Here

Read the latest news from Tyler Tysdal.
Follow Tyler Tysdal on Twitter
Contact Tyler Tysdal on Linkedin
Check out more pictures from Tyler Tysdal On Pinterest.com

SEC.gov | SEC Charges Crowdfunding Portal, Issuer, and Related Individuals for Fraudulent Offerings

The Securities and Exchange Commission today charged three individuals and one issuer with conducting a fraudulent scheme to sell nearly $2 million of unregistered securities through two crowdfunding offerings. The SEC also charged the registered funding portal and its CEO, who placed the offerings on the portal’s platform.

According to the SEC's complaint, Robert Shumake, alongside associates Nicole Birch and Willard Jackson, conducted fraudulent and unregistered crowdfunding offerings through two cannabis and hemp companies, Transatlantic Real Estate LLC and 420 Real Estate LLC.  Shumake, with assistance from Birch and Jackson, allegedly hid his involvement in the offerings from the public out of concern that his prior criminal conviction could deter prospective investors. The complaint alleges that Shumake and Birch raised $1,020,100 from retail investors through Transatlantic Real Estate, and Shumake and Jackson raised $888,180 through 420 Real Estate. Shumake, Birch, and Jackson allegedly diverted investor funds for personal use rather than using the funds for the purposes disclosed to investors. As alleged, TruCrowd Inc., a registered funding portal, and its CEO, Vincent Petrescu, hosted the Transatlantic Real Estate and 420 Real Estate offerings on TruCrowd's platform. Petrescu allegedly failed to address red flags including Shumake's criminal history and involvement in the crowdfunding offerings, and otherwise failed to reduce the risk of fraud to investors.

"Crowdfunding offerings enable issuers to cast a wide net for potential investors, emphasizing the importance of full and honest disclosure," said Gurbir S. Grewal, Director of the SEC's Division of Enforcement. "As companies continue to raise funds through crowdfunding offerings, we will hold issuers, gatekeepers, and individuals accountable and enforce the protections in place for all investors."

The SEC's complaint, which was filed in the U.S. District Court for the Eastern District of Michigan, charges Shumake, Birch, Jackson, and 420 Real Estate with violating the antifraud and registration provisions of the Securities Act of 1933 and Securities Exchange Act of 1934, and seeks disgorgement plus pre-judgment interest, penalties, permanent injunctions, and officer and director bars. The complaint also charges TruCrowd and Petrescu with violating the crowdfunding rules of the Securities Act and seeks disgorgement plus pre-judgment interest, penalties, and permanent injunctions.

The SEC's Office of Investor Education and Advocacy has issued an investor bulletin on crowdfunding and investor alerts on the red flags of investment fraud. Additional information is available at Investor.gov.

The SEC's investigation was conducted by Jerrold H. Kohn, Dante A. Roldán, Pesach Glaser, and Kristine Rodriguez, and supervised by Ana D. Petrovic, and the litigation will be led by John Birkenheier, all of the Chicago Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

Read More

Follow Tyler Tysdal Online

Go read the latest news from Tyler Tysdal.
Check out the biography for Tyler Tivis Tysdal on Crunchbase to see experience.
Follow Tyler Tysdal on Linkedin
Follow Tyler Tysdal on Pinterest

SEC.gov | SEC Charges Former Pharmaceutical Global IT Manager in $8 Million Insider Trading Scheme

The Securities and Exchange Commission today announced insider trading charges against Dayakar R. Mallu, of Orlando, Florida, who generated gains and avoided losses totaling over $8 million by trading in the securities of his former employer, Mylan N.V., ahead of four public announcements between Oct. 3, 2017, and July 29, 2019.

The SEC’s complaint, filed in the United States District Court for the Western District of Pennsylvania, alleges that Mallu received material nonpublic information about Mylan's unannounced earnings, drug approvals by the U.S. Food and Drug Administration, and impending merger with a division of Pfizer Inc. from his friend, a Mylan insider. The complaint alleges that Mallu traded on that information, and shared a portion of his trading profits with the Mylan insider by making cash payments in India.

"As alleged in our complaint, Mallu exploited his access to valuable information concerning Mylan’s earnings information, drug announcements, and merger plans to place highly successful options trades," said Scott A. Thompson, Co-Acting Regional Director of the SEC's Philadelphia Regional Office. "But Mallu's efforts to conceal his scheme through secure messaging apps and foreign cash payments were unavailing, as this case highlights the agency's ability to use sophisticated data analysis to detect suspicious trading patterns and identify the traders behind them."

The SEC's complaint charges Mallu with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Mallu has consented to the entry of a judgment which, if approved by the court, would permanently enjoin him from violating the charged provisions and bar him from acting as the officer or director of a public company, with civil penalties, if any, to be decided later by the court.

In a parallel action, the U.S. Department of Justice, Fraud Section, today announced criminal charges against Mallu.

The SEC's investigation, which is continuing, is being conducted by Christine R. O'Neil, Matthew B. Homberger, Brian R. Higgins, Oreste P. McClung, and Christopher R. Kelly of the Philadelphia Regional Office and John S. Rymas of the Market Abuse Unit and supervised by Brendan P. McGlynn, Jennifer Chun Barry, and Mr. Thompson.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority and the Options Regulatory Surveillance Authority.

Read More

Check out more sites Tyler Tysdal Here

Go read the most recent news from Ty Tysdal.
Follow Tyler Tysdal on Twitter.com
Check out Presentations from Tysdal on his Vimeo Channel.
See the latest news from Tyler Tysdal

SEC.gov | SEC Awards $11.5 Million to Two Whistleblowers

The Securities and Exchange Commission today announced awards of approximately $11.5 million to two whistleblowers whose information and assistance contributed to the success of an SEC enforcement action.

The first whistleblower received an award of nearly $7 million, while the second whistleblower received more than $4.5 million. The larger award was in recognition of the fact that the first whistleblower was the initial source that caused the staff to open the investigation into hard-to-detect violations and thereafter provided substantial assistance. The second whistleblower, by comparison, submitted information later, after the investigation was already underway, and had delayed reporting to the Commission for several years after becoming aware of the wrongdoing.

"This case demonstrates the Commission's continued commitment to rewarding individuals who provide high-quality tips, and particularly timely ones," said Emily Pasquinelli, Acting Chief of the SEC's Office of the Whistleblower. "These whistleblowers reported credible information that aided the Commission's investigation and their subsequent cooperation allowed the Commission to better understand the violations that formed the basis of the enforcement action."

The SEC has awarded approximately $1 billion to 212 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards.  Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.  Whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million.

As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower's identity.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

Read More

Follow Tyler Tivis Tysdal Online

Go read the most recent news from Tyler Tysdal.
Follow Tyler T. Tysdal on Twitter.com
See the latest news from Tyler Tysdal on Linkedin
Follow Tyler T. Tysdal on Instagram

SEC.gov | RBC Charged With Failing to Give Priority to Retail and Institutional Investors in Municipal Offerings

The Securities and Exchange Commission today announced that RBC Capital Markets LLC has agreed to pay more than $800,000 to resolve charges that it engaged in unfair dealing in municipal bond offerings. The SEC also announced settled charges against Kenneth G. Friedrich, RBC's former head of Municipal Sales, Trading and Syndication, and Jaime L. Durando, the head of RBC's municipal syndicate desk.

According to the SEC's order, over a nearly four-year period, RBC improperly allocated bonds intended for institutional customers and dealers to parties known in the industry as "flippers," who then resold or "flipped" the bonds to other broker-dealers at a profit. In addition, the order finds that, in three instances where an issuer had instructed RBC to place retail customer orders first, RBC violated those instructions by allocating bonds to flippers ahead of orders for retail customers. The order finds that RBC knew or should have known that flippers were not eligible for retail or institutional priority and that allocating bonds to the flippers ahead of customers and other dealers violated RBC's internal priority policy for allocating municipal bonds in primary offerings. The order also finds that, in certain offerings not underwritten by RBC, RBC improperly obtained bonds for its own inventory by placing orders with flippers, which allowed RBC to circumvent the lower priority it would have been assigned had it attempted to place direct orders with the underwriters.

"We will continue to pursue those who undermine priority rules and crowd out legitimate retail or institutional customers from getting access to newly issued municipal bonds," said LeeAnn G. Gaunt, Chief of the Division of Enforcement's Public Finance Abuse Unit.

The SEC previously brought charges of municipal bond offering "flipping" and retail order period abuses in August 2018, December 2018, September 2019, April 2020, July 2020, September 2020, July 2021 and August 2021.

Without admitting or denying the findings, RBC consented to a public administrative and cease-and-desist order that finds it violated the order disclosure, fair dealing, and supervisory provisions of Municipal Securities Rulemaking Board (MSRB) Rules and the related Exchange Act provision, caused the flippers' violations of the broker registration provisions of the Exchange Act, and failed reasonably to supervise certain of its registered representatives within the meaning of the Exchange Act. The order requires RBC to pay a $150,000 penalty, disgorgement of $552,440, plus prejudgment interest of $160,886, and imposes a censure.

In related actions, the SEC instituted settled proceedings today against Friedrich and Durando.  The SEC's orders find that Friedrich and Durando permitted the improper allocation and sale of new issue bonds to the flippers, and that Friedrich also permitted the improper purchase of new issue bonds for RBC's own inventory through the flippers. Without admitting or denying the findings, Friedrich and Durando consented to public administrative and cease-and-desist orders finding they violated the order disclosure and fair dealing provisions of MSRB Rules and the related Exchange Act provision, and, as to Friedrich, that he violated the supervisory provisions of MSRB Rules and failed reasonably to supervise Durando within the meaning of the Exchange Act. Friedrich agreed to a censure and to pay a civil penalty of $30,000, and Durando agreed to a censure and to pay a civil penalty of $25,000. Friedrich further consented to a six-month limitation on supervisory activities and a six-month prohibition on trading negotiated new issue municipal securities.

The SEC's investigation was conducted by Kevin B. Currid, Sue Curtin and Heidi M. Mitza of the Public Finance Abuse Unit and Kathleen B. Shields of the Boston Regional Office, with assistance from Deputy Unit Chief Mark Zehner and Public Finance Abuse Unit members Joseph Chimienti, Laura Cunningham, Warren Greth, Cori Shepherd, and Jonathan Wilcox.

Read More

Check out more sites Tyler T. Tysdal Here

Go read the latest news from Tyler Tysdal.
Follow Tyler Tivis Tysdal on Twitter
Watch Presentations from Tysdal on Vimeo.
See the latest news from Tyler Tysdal

SEC.gov | SEC Charges School District and Former Executive with Misleading Investors in Bond Offering

The Securities and Exchange Commission today charged a San Diego County school district, Sweetwater Union High School District, and its former Chief Financial Officer, Karen Michel, with misleading investors who purchased $28 million in municipal bonds.

According to the SEC's complaint against Michel and its order against Sweetwater, in April 2018, Sweetwater and Michel provided investors with misleading budget projections that indicated the district could cover its costs and would end the fiscal year with a general fund balance of approximately $19.5 million, when in reality the district was engaged in significant deficit spending and on track to a negative $7.2 million ending fund balance. The order finds that Michel managed the bond offering for the district and was aware of reports showing that the projections were untenable and contradicted by known actual expenses. Nevertheless, as stated in the order, Sweetwater and Michel included the projections in the April 2018 bonds' offering documents and also provided them to a credit rating agency that rated the district, while omitting that the projections were contradicted by internal reports and did not account for actual expenses. Additionally, the complaint alleges that Michel signed multiple certifications falsely attesting to the accuracy and completeness of the information included in the offering documents.

"As the order finds, Sweetwater and Michel presented stale and misleading financial information as current and accurate," said LeeAnn G. Gaunt, Chief of the Division of Enforcement's Public Finance Abuse Unit. "The SEC will continue to address deceptive conduct that prevents municipal bond investors from getting an accurate picture of the financial risks of their investments."

The SEC's complaint against Michel, filed in U.S. District Court for the Southern District of California, charges her with violating Section 17(a)(3) of the Securities Act of 1933. Without admitting or denying the allegations in the complaint, Michel agreed to settle with the SEC and to be enjoined from future violations of the charged provision as well as from participating in any future municipal securities offerings. She also agreed to pay a $28,000 penalty. The settlement is subject to court approval. Sweetwater also agreed to settle with the SEC and consented, without admitting or denying any findings, to the entry of an SEC order finding that it violated Sections 17(a)(2) and 17(a)(3) of the Securities Act, and requiring it to engage an independent consultant to evaluate its policies and procedures related to its municipal securities disclosures.

For further information about the SEC's enforcement actions involving fraud charges in connection with bond issuances by or on behalf of schools and colleges, see SEC v. Park View School, Inc. (D. Ariz. September 14, 2020), SEC v. Batchelor (N.D. Cal. April 27, 2020), SEC v. Rojas (C.D. Cal. September 19, 2019), and SEC v. Borge (S.D.N.Y. March 28, 2019).  The SEC has also brought a number of recent enforcement actions against municipal advisors who provide services to school district issuers.

The SEC's investigation was conducted by William T. Salzmann, Jessica A. Adams, Creighton Papier, and Joseph Chimienti of the Public Finance Abuse Unit. The investigation was supervised by Jason H. Lee. The SEC acknowledges the assistance of the San Diego County District Attorney’s Office.

Read More

Follow Tyler Tysdal Here

Read more from Tyler Tysdal at this website
See the latest news from Ty Tysdal on Linkedin
Check out more pictures from Tyler Tysdal On Pinterest.com

SEC.gov | SEC Surpasses $1 Billion in Awards to Whistleblowers with Two Awards Totaling $114 Million

The Securities and Exchange Commission today announced awards of approximately $110 million and $4 million to two whistleblowers whose information and assistance led to successful SEC and related actions.  With these awards, the SEC's whistleblower program has now paid more than $1 billion in awards to 207 whistleblowers, including over $500 million in fiscal year 2021 alone. The $110 million award stands as the second-highest award in the program's history, following the over $114 million whistleblower award the SEC issued in October 2020.

"Today's announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws," said SEC Chair Gary Gensler. "The assistance that whistleblowers provide is crucial to the SEC's ability to enforce the rules of the road for our capital markets."

"The whistleblower program has been instrumental to the success of numerous enforcement actions since it was instituted a decade ago," said SEC Director of Division of Enforcement Gurbir S. Grewal. "We hope that today's announcement encourages whistleblowers to continue to come forward with credible information about potential violations of the securities laws."

The first whistleblower's $110 million award consists of an approximately $40 million award in connection with an SEC case and an approximately $70 million award arising out of related actions by another agency. The first whistleblower provided significant independent analysis that substantially advanced the SEC's and the other agency's investigations. The second whistleblower voluntarily provided original information that led to the successful enforcement action, but this information was provided to the SEC after the staff had opened an investigation and undertaken significant investigative steps, and was much more limited as compared to the information and assistance provided by the first whistleblower.

"Whistleblowers can play an extraordinary role in helping the SEC ferret out wrongdoing," said Emily Pasquinelli, Acting Chief of the SEC's Office of the Whistleblower. "Whistleblowers may provide critical information based on their own independent analysis that facilitates the SEC's investigation and the successful resolution of the enforcement action."

The SEC has awarded approximately $1 billion to 207 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million.

As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose any information that could reveal a whistleblower's identity.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

Read More

Tyler Tysdal - Business Broker

Tyler Tysdal is the world's best business broker. Tyler is the managing partner and cofounder at Freedom Factory. Tyler Tysdal Will Help You Sell Your Business in Garland-Texas or anywhere else in the USA.

Contact Freedom Factory

Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
www.freedomfactory.com
Freedom Factory

Follow Tyler T. Tysdal At these Sites

Subscribe to Tyler T. Tysdal at this website
See the latest news from Ty Tysdal on Linkedin.com
Follow Tyler Tysdal on Instagram.com

SEC.gov | SEC Charges App Annie and its Founder with Securities Fraud

The Securities and Exchange Commission today announced that App Annie Inc., a leading alternative data provider for the mobile app industry, and its co-founder and former CEO and Chairman Bertrand Schmitt, have agreed to settle securities fraud charges for engaging in deceptive practices and making material misrepresentations about how App Annie's alternative data was derived. App Annie and Schmitt have agreed to pay more than $10 million to settle the matter, which is the SEC's first enforcement action charging an alternative data provider with securities fraud.

According to the SEC's order, App Annie is one of the largest sellers of market data on mobile app performance, including estimates on the number of times a particular company's app is downloaded, how often it's used, and the amount of revenue the app generates for the company. Trading firms commonly refer to this type of information as "alternative data" because it is not contained within companies' financial statements or other traditional data sources. The order finds that App Annie and 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, and as a result App Annie and Schmitt assured companies that their data would be aggregated and anonymized before being used by a statistical model to generate estimates of app performance. Contrary to these representations, the order finds that from late 2014 through mid-2018, App Annie used non-aggregated and non-anonymized data to alter its model-generated estimates to make them more valuable to sell to trading firms.

The order further finds that App Annie and Schmitt misrepresented to their trading firm customers that App Annie generated the estimates in a way that was consistent with the consents it obtained from companies that shared their confidential data, and that App Annie had effective internal controls to prevent the misuse of confidential data and to ensure that it was in compliance with the federal securities laws. According to the SEC's order, App Annie and Schmitt were aware that trading firm customers were making investment decisions based on App Annie's estimates, and App Annie also shared ideas for how the trading firms could use the estimates to trade ahead of upcoming earnings announcements.

"The federal securities laws prohibit deceptive conduct and material misrepresentations in connection with the purchase or sale of securities," said Gurbir S. 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."

"App Annie sought to distinguish itself in the alternative data space by providing securities market participants with valuable information in a new and innovative way," said Erin E. Schneider, Director of the SEC's San Francisco Regional Office. "It went to great lengths to assure its customers that the financial and app-related data it sold was the product of a sophisticated statistical model and that it had controls to ensure compliance with the federal securities laws. These representations were materially false and misleading."

The SEC's order finds that App Annie and Schmitt violated the anti-fraud provisions of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Without admitting or denying the findings, App Annie and Schmitt consented to the entry of a cease-and-desist order under which App Annie is ordered to pay a penalty of $10 million, Schmitt is ordered to pay a penalty of $300,000, and Schmitt is prohibited from serving as an officer or director of a public company for three years.

The SEC's investigation was conducted by Sallie Kim, with assistance from Andrew Hefty, under the supervision of Steven Buchholz and Monique C. Winkler of the San Francisco Regional Office. Darren Boerner of the Market Abuse Unit's Analysis and Detection Center and Judy Tran of the Division of Economic and Risk Analysis also assisted the investigation.  Division of Examinations staff members Adam Storch of the Event & Emerging Risk Examination Team, and Matthew Harris and Christopher Marino of the Private Funds Unit, conducted examinations that contributed to the investigation.

Read More

Tyler Tysdal - Business Broker

Tyler Tysdal is the world's best business broker. Tyler is the managing partner and cofounder at Freedom Factory. Tyler Tysdal Will Help You Sell Your Business in Roseville-California or anywhere else in the USA.

Contact Freedom Factory

Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
www.freedomfactory.com
Freedom Factory