SEC Settles Securities Fraud Charges with App Annie and its Founder

October 4, 2021

On September 14, 2021,1 the Securities and Exchange Commission (the “Commission”) agreed to a settlement with App Annie Inc. (“App Annie”), a leading alternative data provider, and its co-founder and former CEO and Chairman Bertrand Schmitt (“Schmitt”), for engaging in deceptive practices and making materially false and misleading representations about how App Annie’s alternative data was derived.

According to the Commission’s settlement order (the “Order”), App Annie is one of the largest sellers of “alternative market data”2 (i.e., information about companies or investments that is not contained within companies’ financial statements or other traditional data sources) on mobile app performance, including estimates on the number of times a particular company’s app is downloaded, how often it is used, and the amount of revenue the app generates for the company. Many trading firms pay for subscriptions to alternative data sources like App Annie and use this alternative data in making investment decisions. The Order found 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. 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 found that from late 2014 through mid-2018, App Annie, under Schmitt’s direction, 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 found 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 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 Commission charged App Annie and Schmitt with violations of the anti-fraud provisions of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Under the terms of the settlement, App Annie and Schmitt were censured and App Annie and Schmitt were ordered to pay penalties of $10,000,000 and $300,000, respectively. The Order also prohibited Schmitt from serving as an officer or director of a public company for three years.

S&K Observations

The Order is the Commission’s first enforcement action charging an alternative data provider with securities fraud. The Order underscores the Commission’s attention to the area of alternative data. Although the Order did not involve investment advisers that use App Annie, in light of the Commission’s focus on alternative data arrangements, advisers that use alternative data may wish to revisit their policies and procedures addressing these arrangements.

Seward and Kissel LLP, and our compliance consulting service SKRC (Seward & Kissel Regulatory Compliance), are available to assist advisers with the design and implementation of policies and procedures regarding the use of alternative data.


1 See SEC Press Release available at

2 See “Use of Alternative Data by Investment Advisers” by Paul M. Miller and Lancelot A. King, Seward & Kissel LLP, IAA Newsletter (July 20, 2021), available at