A Data-Driven Felony

As limiting as it might feel at times for the companies, the importance of regulation and compliance isn’t lost on anyone. With new players swarming the industries, something like regulation takes a position of even more significance. If there are no regulations and compliance obligations in place, then things can easily go haywire, eventually taking the industry towards a collapse. The core task of regulators is certainly keeping things fair and organized, but over the years, their duties have become more and more layered, and the admission of technology into the frame means that their role is now essentially reinvented. From a more general standpoint, technology’s entry doesn’t look like a big deal for the regulatory sphere, but to get a better grasp of the situation, we have to look at what all it brings to the table. Technology has opened up more convenient pathways to institutional success; however, it has done so at an expense of opaque operations and a greater likelihood of non-compliance. Owing to the burgeoning number of such cases, regulatory bodies have been left with no option but to shake up their approach and treat the tech tools that are facilitating these cases with similar seriousness. An example of their changed approach appears within the shadows of a penalty slapped on App Annie.

The US Securities and Exchange Commission have formally announced that the mobile app data provider, App Annie is found guilty for “engaging in deceptive practices and misrepresenting the origins of its data”. As a result of it, the provider will have to pay a fine worth $10 million. SEC’s statement revealed that App Annie had promised its clients that the data they are sharing with the provider will be strictly used in an anonymized ways through an algorithm for the purpose of generating performance estimates. However, the company would go on to use real performance data to tweak its estimates. As per the reports, App Annie constantly indulged in this activity between 2014 and 2018, but that’s not all what they did.

The commission also took the veil of App Annie’s secret dealings with various trading firms, as the data provider sold a sizeable amount of confidential information to these firms by misleading them into thinking that the data was in line with federal securities laws. Apart from App Annie itself, the company’s now former CEO, Bertrand Schmitt was also fined a sum of $300,000. Furthermore, Schmitt will be barred from serving as a director or an officer for any public company over the next three years.

“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,” says Gubir S. Grewal, director of SEC’s Enforcement Division.

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