The Securities and Exchange Commission today charged the founder and former chief executive of a Silicon Valley startup with defrauding investors in Jumio Inc., a private mobile payments company. The former CEO, Daniel Mattes, agreed to pay more than $17 million to settle the charges.
According to the SEC’s complaint, filed in federal court in California, Mattes grossly overstated Jumio’s 2013 and 2014 revenues and then sold shares he held personally to investors in the private, secondary market. The complaint alleges that Mattes made approximately $14 million by selling his Jumio shares and hid these sales from Jumio’s board. According to the complaint, Mattes also falsely told an investor that he didn’t want 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.
“Mattes enriched himself at investors’ expense by making false claims about Jumio’s financial results,” said Erin Schneider, Associate Regional Director for the SEC’s San Francisco office. “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 U.S., and will pay more than $16 million in disgorgement and prejudgment interest plus a $640,000 penalty. The settlement is subject to court approval.
The SEC’s investigation was conducted by Ruth Hawley, Christina Filipp, and Crystal Boodoo, and supervised by Jeremy Pendrey of the San Francisco Regional Office.