Litigation Releases (Paul D. Roberts, Joshua A. Weiss, and Grainne M. Coen)

Paul D. Roberts, Joshua A. Weiss, and Grainne M. Coen

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26107 / September 16, 2024

Securities and Exchange Commission v. Paul D. Roberts

,

No. 1:24-cv-06990 (S.D.N.Y. filed September 16, 2024), and

Joshua A. Weiss and Grainne M. Coen

, No. 1:24-cv-06988 (S.D.N.Y. filed Sept. 16, 2024)

SEC Charges Former Chairman and CEO of Tech Co. Kubient With Fraud and Lying to Auditors - Former CFO and Audit Committee Chair also Charged

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 schemeby 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.

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 Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities and Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-2 thereunder, and aiding and abetting Kubient's violations of Section 13(a) of the Exchange Act and various rules thereunder. Roberts and Weiss are also charged with making false certifications under Rule 13a-14 of the Exchange Act, and aiding and abetting Kubient's violations of Sections 13(b)(2)(A), 13b(2)(B), and 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder. The complaints seek injunctions, officer-and-director bars, civil penalties, disgorgement of ill-gotten gains and other relief. 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 criminal 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 Jason J. 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.

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