In a first-of-its-kind enforcement action, the Securities and Exchange Commission (SEC) has charged an alternative data provider with securities fraud, setting precedent for future enforcement activity.

App Annie, an alternative data provider for the mobile app industry, and its co-founder and former CEO Bertrand Schmitt will pay more than $10 million for engaging in deceptive practices and making material misrepresentations about how the company derived its alternative data, the SEC announced Tuesday.

App Annie sells market data on mobile app performance, including download estimates, use tracking, and revenue generated. This “alternative data” is not contained within companies’ financial statements or other traditional data sources.

“Many trading firms pay for subscriptions to alternative data sources like App Annie and use this alternative data in making investment decisions,” the SEC’s order stated.

App Annie and Schmitt assured companies their data would be aggregated and anonymized before being used by a statistical model to generate performance estimates, according to the SEC. But from late 2014 through mid-2018, App Annie used non-aggregated and non-anonymized data to alter its estimates in a way that made them more valuable to sell to trading firms, the agency noted.

These alleged actions were misrepresented to trading firm customers. App Annie also misrepresented it had effective internal controls to prevent misuse of confidential data and ensure it complied with federal securities laws, the SEC added. This included assuring subscribers the company underwent regular compliance reviews that never actually took place.

“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—often touting how closely they correlated with the companies’ true performance and stock prices,” said SEC Enforcement Division Director Gurbir Grewal in a press release.

The SEC found App Annie and Schmitt violated the antifraud provisions of Section 10(b) of the Exchange Act and Rule 10b-5. Without admitting or denying the findings, App Annie and Schmitt consented to the entry of a cease-and-desist order. Schmitt will pay a $300,000 penalty and is prohibited from serving as an officer or director of a public company for three years.