Washington, D.C.--(Newsfile Corp. - September 16, 2024) - The Securities and Exchange Commission today filed charges against Paul D. Roberts, the former Chair, CEO, and president of Kubient Inc.; Joshua A. Weiss, the company's former chief financial officer; and Grainne M. Coen, the company's former audit committee chair, for their roles in a scheme in which Kubient overstated and misrepresented its revenue in connection with two public stock offerings.

According to the SEC's complaint against Roberts, shortly before Kubient's initial public offering, Roberts fabricated reports that Kubient had successfully tested a software program that detects real-time fraud during digital advertising auctions, allowing Kubient to recognize $1.3 million in revenue, which was nearly all of its revenue leading up to the offering. The complaint alleges that Kubient did not actually perform the tests and thus should not have recognized the revenue. In a separate complaint, the SEC alleges that Weiss and Coen learned during Kubient's secondary stock offering that the tests had not been performed, but instead of investigating or correcting the misrepresentations, Weiss and Coen perpetuated the scheme by making false statements about the revenue at issue. Additionally, Roberts, Weiss, and Coen allegedly each lied to Kubient's independent auditor about the revenue or whether they had become aware of any concerns about it. According to the SEC's complaints, Kubient raised approximately $33 million in the two stock offerings using offering materials that touted the misrepresentations about the success of the tests and the revenue.

"As alleged, this was a deliberate scheme by a public company CEO to concoct phony revenue, perpetuated by the failure of the company's CFO and independent audit committee chair to act appropriately when they learned of concerns about that revenue," said Jason J. Burt, Director of the SEC's Denver Regional Office. "This case should send an important signal to gatekeepers like CFOs and audit committee members that the SEC and the investing public expect responsible behavior when critical issues are brought to their attention."

The SEC's complaints, both of which were filed in the U.S. District Court for the Southern District of New York, charge Roberts, Weiss, and Coen with violating the antifraud and other provisions of the federal securities laws and lying to auditors. The complaints seek injunctions, officer-and-director bars, disgorgement of ill-gotten gains, civil penalties, and other relief against each of the defendants. In a partial settlement, Roberts has consented to injunctions from future violations of the charged provisions while agreeing to litigate the appropriate remedies. His settlement is subject to court approval.

In a parallel criminal matter, the U.S. Attorney's Office for the Southern District of New York today announced charges against Roberts.

The SEC's investigation was conducted by Jeffrey S. Lyons, Emily C. Scruggs, and Donna B. Walker, and supervised by Ian S. Karpel, Nicholas P. Heinke, and Mr. Burt. The litigation will be led by Jodanna Haskins and Ian Kellogg and supervised by Gregory A. Kasper, Mr. Heinke, and Mr. Burt.

The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the U.S. Postal Inspection Service.