SEC Charges GrubMarket with Overstating Revenue to Investors by More Than $500 Million
summary
GrubMarket Inc. settled SEC charges for overstating historical revenues by $550 million during an $80 million Series D offering, resulting in an $8 million civil penalty.
paragraph
GrubMarket Inc. violated federal antifraud provisions by providing misleading financial statements during a private Series D fundraising round between November 2019 and February 2021. The company overstated its historical revenues by approximately $550 million while using significantly lower figures for its tax filings. To resolve these charges, the company agreed to a cease-and-desist order and an $8 million civil penalty.
narrative
The SEC announced settled charges against GrubMarket Inc., a private e-commerce food distributor, for providing unreliable financial information to investors. Between November 2019 and February 2021, the company raised approximately $80 million in a Series D offering using financial statements that overstated historical revenues by $550 million. While soliciting these investors, GrubMarket simultaneously used a different, lower set of financial data for its tax filings. The company failed to disclose this significant discrepancy until after the fundraising round had already closed. Consequently, the SEC found that GrubMarket violated federal antifraud provisions of securities laws. Without admitting or denying the findings, GrubMarket agreed to a cease-and-desist order and an $8 million civil penalty.
Classified pre-ipo-fraud(confidence 100%). EDGAR detection: forms S-1/Form D/1-A· recall 72% / precision 8%. detection rule →
Statutes
15 U.S.C. § 77q(a)
Parties
antifraud provisionsdifferent financial informationfinancial informationgrubmarket inc.sec investigationSecurities and Exchange Commissionseries d investors
Keywords
grubmarketinvestorsfinancial informationsechistorical revenuesfinancialmillioninformationhistoricalcompanyrevenuesorderseriesgrubmarket overstatingoverstating revenue
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 3
- $550.00M $550 million $100M–$1B
- $80.00M $80 million $10M–$100M
- $8.00M $8 million $1M–$10M
Entities 7
- person antifraud provisions
- person different financial information
- person financial information
- company grubmarket inc.
- agency sec investigation
- agency Securities and Exchange Commission
- person series d investors
Triples 9
- SEC announced charges against GrubMarket Inc.
- GrubMarket Inc. overstated historical revenues by $550 Million
- GrubMarket raised $80 Million
- GrubMarket emailed Financial Information
- GrubMarket used Different Financial Information
- GrubMarket did not inform Series D Investors
- GrubMarket violated Antifraud Provisions
- GrubMarket agreed to pay $8 Million Civil Penalty
- Benjamin Wasserman, John Rossetti, and Gary Peters conducted SEC Investigation
PDF (from attached: pdf)
Text layers
Extracted body text (2,332c)
The Securities and Exchange Commission today announced settled charges against GrubMarket Inc., a private, California-based e-commerce food distributor, for providing investors with financial information that the company should have known was unreliable and that overstated its historical revenues by approximately $550 million. According to the SEC’s Order, between November 2019 and February 2021, GrubMarket raised approximately $80 million from investors in a private Series D offering. When soliciting prospective investors in the Series D round, GrubMarket emailed them financial information, including an investor presentation and financial statements, which prospective investors incorporated into their investment analyses and decisions. At the same time, GrubMarket was using a different set of financial information, including in its tax filings, that reflected significantly lower historical revenues for other corporate purposes. In doing so, GrubMarket should have known that the financial information it was using to solicit prospective Series D investors, which overstated the company’s historical revenues by $550 million over a five-year period, was unreliable. Even so, GrubMarket did not inform any Series D investors about the significant discrepancy in historical revenues until after the fundraising round closed. “In our markets, when potential investors ask for and receive financial information from startups, they reasonably expect those financials to be accurate, reliable, and free from material misrepresentations and omissions,” said Mark Cave, Associate Director of the SEC’s Division of Enforcement. “Today’s order finds that GrubMarket provided investors with financial information that painted a misleading picture of the company’s historical performance, while at the same time using higher-quality financials for other business purposes. That practice cannot be squared with the company’s obligations to investors.” The SEC’s order finds that GrubMarket violated certain antifraud provisions of the federal securities laws. Without admitting or denying the SEC’s findings, GrubMarket agreed to a cease-and-desist order and to pay an $8 million civil penalty. The SEC’s investigation was conducted by Benjamin Wasserman, John Rossetti, and Gary Peters and supervised by Jeff Leasure and Mr. Cave.
OCR text (2,332c · html-text · 99% conf)
The Securities and Exchange Commission today announced settled charges against GrubMarket Inc., a private, California-based e-commerce food distributor, for providing investors with financial information that the company should have known was unreliable and that overstated its historical revenues by approximately $550 million. According to the SEC’s Order, between November 2019 and February 2021, GrubMarket raised approximately $80 million from investors in a private Series D offering. When soliciting prospective investors in the Series D round, GrubMarket emailed them financial information, including an investor presentation and financial statements, which prospective investors incorporated into their investment analyses and decisions. At the same time, GrubMarket was using a different set of financial information, including in its tax filings, that reflected significantly lower historical revenues for other corporate purposes. In doing so, GrubMarket should have known that the financial information it was using to solicit prospective Series D investors, which overstated the company’s historical revenues by $550 million over a five-year period, was unreliable. Even so, GrubMarket did not inform any Series D investors about the significant discrepancy in historical revenues until after the fundraising round closed. “In our markets, when potential investors ask for and receive financial information from startups, they reasonably expect those financials to be accurate, reliable, and free from material misrepresentations and omissions,” said Mark Cave, Associate Director of the SEC’s Division of Enforcement. “Today’s order finds that GrubMarket provided investors with financial information that painted a misleading picture of the company’s historical performance, while at the same time using higher-quality financials for other business purposes. That practice cannot be squared with the company’s obligations to investors.” The SEC’s order finds that GrubMarket violated certain antifraud provisions of the federal securities laws. Without admitting or denying the SEC’s findings, GrubMarket agreed to a cease-and-desist order and to pay an $8 million civil penalty. The SEC’s investigation was conducted by Benjamin Wasserman, John Rossetti, and Gary Peters and supervised by Jeff Leasure and Mr. Cave.