SEC Discussion on the App Annie Ruling and Alternative Data Examinations
Following the SEC’s ruling on App Annie, Eagle Alpha believed it to be particularly pertinent to speak directly with the SEC in order to further understand the commission’s enforcement around alternative data and their examination procedure and requirements.
Enforcement of the App Annie Case
Without going too deep into the App Annie case, the SEC outlined several key points which provided clarity as to why this ruling was an effective first case for the SEC with regard to alternative data.
Firstly, the enforcement team focused on violations related to securities trading, so this case was not established with alternative data specifically in mind, but ended up being a key facet to the overall case. The conclusion of the enforcement action resulted in a “no admit, no deny” settlement, with both App Annie and former CEO Bertrand Schmitt neither admitting nor denying the SEC’s findings.
Secondly, the market abuse unit usually investigates violations surrounding insider trading, but it is pertinent to understand that even though section 10(b) of the Securities and Exchange Act was cited in the settlement, App Annie were not involved in an insider trading case, but securities fraud.
Thirdly, the misrepresentation was largely focused on how the data and estimates were derived and whether or not they were generated consistently with the consent of app data companies, and finally, if the data was only used in aggregated and anonymized form. Based on this, the SEC found misrepresentations to both data providers and data buyers, and general deceptive conducts related to the use or misuse of data.
The ONE Conference, Midtown New York – October 13th, 2021.