January 18, 2022

Volume XII, Number 18


Implications of SEC’s Scrutiny of Data Use Representations

The SEC’s enforcement action with a leading seller of market data (App Annie Inc.) signals its concern with misleading data use representations. While the data at issue was not “personally identifiable” information, but instead corporate confidential information, the SEC’s concerns mirrored those that we have previously seen from that agency, as well as others, regarding representations made about personal information.

App Annie provides investment insights to help its trading firm clients identify potential investment opportunities. Information it provides includes information about mobile application performance, like app downloads, usage, and revenue. One of App Annie’s products, App Annie Connect, provides statistical model-generated “estimates” of application performance for its customers based on “aggregated pools of information.”  The App Annie Connect Terms of Service indicate this is done in order to ensure the data cannot be identified as coming from a particular company.  According to the SEC, App Annie falsely assured its clients that the company had policies in place to prevent the disclosure of nonpublic information, when in fact App Annie used its non-aggregated, non-anonymized, nonpublic confidential data to alter its model-generated estimates to make them more accurate and more valuable to trading firms.

The SEC claimed that these actions constituted fraud in connection with the purchase or sale of securities, in violation of Section 10(b) of the Securities Exchange Act, because App Annie’s clients used the “estimates” to make purchases and sales of securities.  Without admitting fault, App Annie consented to a cease and desist order and payment of $10 million penalty.

 Putting it Into Practice: This settlement is a reminder that the SEC is looking closely at companies’ representations about data use, and expects that representations made will be followed. 

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 321

About this Author

Liisa Thomas, Sheppard Mullin Law Firm, Chicago, Cybersecurity Law Attorney

Liisa Thomas, a partner based in the firm’s Chicago and London offices, is Co-Chair of the Privacy and Cybersecurity Practice. Her clients rely on her ability to create clarity in a sea of confusing legal requirements and describe her as “extremely responsive, while providing thoughtful legal analysis combined with real world practical advice.” Liisa is the author of the definitive treatise on data breach, Thomas on Data Breach: A Practical Guide to Handling Worldwide Data Breach Notification, which has been described as “a no-nonsense roadmap for in-house and...

Kari Rollins Intellectual Property Lawyer Sheppard

Kari M. Rollins is a partner in the Intellectual Property Practice Group in the firm's New York office.

Areas of Practice

Ms. Rollins focuses her practice on privacy and complex commercial litigation matters. She has successfully represented clients in the financial services, audit and accounting, food services, retail, and fashion industries before state and federal courts, as well as in front of state attorneys general, federal regulators, and U.S. and international commercial arbitration forums....

Sarah Aberg Government Contracts Attorney Sheppard Mullin Law Firm New York
Special Counsel

Sarah Aberg is special counsel in the White Collar Defense and Corporate Investigations Group in the firm's New York office.

Areas of Practice

Sarah's practice encompasses litigation, internal investigations and white collar defense, with a focus on financial services and securities. She has conducted multiple criminal trials and numerous internal investigations into a wide variety of allegations, including mail and wire fraud, mortgage fraud, insider trading, market manipulation, money laundering,...

Elfin Noce Business Trial Attorney

Elfin L. Noce is an Associate in the Business Trial Practice Group in the firm's Washington, D.C. office.


  • Litigation


  • Communications


  • J.D., University of Missouri, Columbia, 2005

  • B.A., Truman State University, 2000


  • *Not admitted in District of Columbia; supervised by partners of the firm

  • Missouri