SEC fines tech start-up boss $17m over investor fraud
3 Apr 2019
The founder and former chief executive of a Silicon Valley startup has agreed to pay more than $17m (£13m) to the Securities and Exchange Commission (SEC) to settle charges relating to investor fraud in Jumio, a private mobile payments company
3 Apr 2019
According to the SEC, former CEO, Daniel Mattes grossly overstated Jumio’s 2013 and 2014 revenues and then sold shares he held personally to investors in the private, secondary market.
The US regulator alleges that Mattes made approximately $14m by selling his Jumio shares and hid these sales from Jumio’s board. Mattes also allegedly falsely told an investor not to sell any of his shares because there was ‘lots of great stuff coming up,’ and that ‘he’d be stupid to sell at this point.’ Jumio restated its financial results in 2015, wiping out most of its revenue, and the shares became worthless after it filed for bankruptcy in 2016.
Erin Schneider, associate regional director for the SEC’s San Francisco office, said: ‘Mattes enriched himself at investors’ expense by making false claims about Jumio’s financial results. Company executives must provide investors with accurate information irrespective of whether their companies are publicly or privately traded.’
The SEC settled a separate proceeding against Jumio’s former CFO Chad Starkey for failing to exercise reasonable care concerning Jumio’s financial statements and signing stock transfer agreements that falsely implied that Jumio’s board of directors had approved Mattes’ sales. Starkey entered into a cooperation agreement to assist the SEC. Starkey, who sold some of his own shares in 2014, will pay approximately $420,000 in disgorgement and prejudgment interest.
Without admitting or denying the allegations, Mattes, an Austrian citizen who now heads a private Austria-based company, has agreed to be enjoined from future similar violations and barred from being an officer or director of a publicly traded company in the US, and will pay more than $16 million in disgorgement and prejudgment interest plus a $640,000 penalty. The settlement is subject to court approval.
Report by Pat Sweet