The US Securities and Exchange Commission (SEC) has accused the analytical company App Annie and its former CEO Bertrand Schmitt of fraud. The regulator said they were selling confidential information about customers without their consent.
As the SEC pointed out, analysts deliberately took a risk. They understood that developers would not share confidential data unless they promised not to disclose this information to third parties. Therefore, App Annie, with Schmitt’s approval, assured customers that it would summarize and depersonalize the data before starting to build statistical models based on them.
Nevertheless, from the end of 2014 to the middle of 2018, App Annie did nothing of the kind. The company used the data as is to make the information “more valuable” for sale to brokers. At the same time, she continued to tell her clients that everything was fine with their data.
App Annie also knew that broker clients made investment decisions based on her information. So she gave the brokers instructions on how best to use her information.
“App Annie tried to stand out among analytical companies by providing securities market participants with important information obtained in a new and innovative way,” said Erin E. Schneider, director of the SEC’s regional office in San Francisco. “The company has made every effort to convince its customers that the financial and application—related data sold to them is the product of a complex statistical model. She also tried to show that she has controls that ensure compliance with the federal securities law. It was all a lie.”
The SEC issued App Annie a fine of $ 10 million, and Schmitt — $ 300 thousand. The Commission also banned Schmitt from holding top positions in companies for three years.
App Annie has already commented on the SEC charges. The company did not recognize them or refute them. But she agreed to pay the fine, noting that the SEC investigation does not apply to her current products and customer relationships.
Schmitt has not been working at App Annie since 2018. Now, instead of him, the position of CEO is occupied by Theodore Krantz.