Washington D.C., Jan. 17, 2025 —The Securities and Exchange Commission today announced settled charges against GrubMarket Inc. BB #:301166, 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.
Washington D.C., Jan. 17, 2025 —The Securities and Exchange Commission today announced settled charges against GrubMarket Inc. BB #:301166, 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.
