Mobile data and analytics company App Annie has agreed to pay $10 million to settle charges that it used confidential information from app developers to induce trading firms to become subscribers.

The settlement announced on Tuesday resolves the U.S. Securities and Exchange Commission’s first enforcement action charging an “alternative data” provider with securities fraud. Co-founder and former CEO Bertrand Schmitt was named as a co-defendant.

According to the SEC, App Annie violated federal securities laws between 2014 and 2018 by making material misrepresentations about how its alternative data about developers was derived to induce trading firms to use its data in their investment decisions.

Since its founding, the company has offered a free app analytics product called “Connect” to developers. More than 100 trading firms subscribed to the “Intelligence” service, which provides estimates of app performance.

“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,” Gurbir Grewal, director of the SEC’s Enforcement Division,” said in a news release.

As The Wall Street Journal reports, “The charges shine a light on the privacy issues surrounding the data business, which has grown in recent years as consumers spend more time online and advertisers and other businesses rely on data for insights and ad-targeting.”

App Annie specializes in data about the number of times a particular company’s app is downloaded, the amount of revenue that a company is generating through its app, and how often customers are using that company’s app.

The SEC said App Annie App assured developers that their Connect data would be aggregated and anonymized before being used by a statistical model to generate estimates of app performance but it actually used non-aggregated and non-anonymized data to alter its estimates to “make them more valuable to sell to trading firms.”

Intelligence customers were allegedly misled into believing that the estimates they were purchasing did not constitute material nonpublic information and that App Annie was using Connect data in a way that was consistent with app developers’ consent.

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