In re GRUBMARKET

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 11354 / January 17, 2025    
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4556 / January 17, 2025    
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22421 
 
In the Matter of 
 
GRUBMARKET, INC. 
 
Respondent. 
 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933, MAKING FINDINGS, AND 
IMPOSING A CEASE-AND-DESIST 
ORDER 
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 
of 1933 (“Securities Act”), against GrubMarket, Inc. (“GrubMarket,” the “Company,” or 
“Respondent”).  
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party and without admitting or denying the findings herein, except as to 
the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 
admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings 
Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-
Desist Order (“Order”), as set forth below.   
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds that: 
 

 2 
Summary 
 
1. Between November 2019 and February 2021, GrubMarket raised approximately 
$80 million from investors in a Series D financing round (“Series D round”), after providing 
investors with financial statements and other financial information that materially overstated the 
Company’s historical revenues.  The financial statements were prepared by a now former 
GrubMarket employee with limited accounting experience, Employee A.  The financial statements 
purported to reflect the consolidated results of operations from dozens of independent wholesalers, 
some of which had rudimentary accounting systems.  GrubMarket was negligent in not disclosing 
that the financial statements and other financial information the Company provided to investors 
were unreliable. 
   
2. In June 2019, before kicking off marketing for the Series D round, and to improve 
its finance function, GrubMarket hired as its Corporate Controller a certified public accountant 
who had an audit background.  The Corporate Controller was promoted to the role of Chief 
Financial Officer in April 2020.
1
  
 
3. GrubMarket’s Chief Executive Officer tasked the CFO with creating a consistent 
accounting infrastructure for GrubMarket’s independent wholesalers and preparing a traceable and 
supportable set of financial statements to be audited in advance of a potential IPO.  Between fall 
2019 and February 2021, the CFO provided periodic updates to the CEO about her progress.  
During this time, GrubMarket also used preliminary revised lower revenue figures for other 
corporate purposes, including the filing of its federal and state income tax returns.  The CFO’s 
work, which ultimately resulted in material changes to GrubMarket’s financial information, 
continued throughout the Series D round, which closed in February 2021. 
 
4. The financial statements and other financial information that GrubMarket used to 
solicit Series D investors overstated revenue by more than $550 million, or about 130%, between 
2016 and 2020.  The financial statements and other financial information included revenues 
attributable to the Company’s independent wholesalers that did not match – and, in several cases, 
were materially higher than – the revenues the independent wholesalers had reported to 
GrubMarket.     
 
5. As a result, GrubMarket was negligent for providing to investors financial 
statements and other financial information that materially overstated its revenues.  
 
6. In January 2021, a Series D investor (“Investor A”) committed to invest $19 million 
in GrubMarket but had not yet wired the funds.  Thereafter, the revised revenue figures were 
substantially completed, and GrubMarket began using the revised financial information to solicit 
new investors for the “Series E” round.  GrubMarket negligently failed to inform Investor A of the 
existence of the revised financials before Investor A wired its $19 million investment.  
 
                                                 
1
 For ease of reference, the employee is referred to as the “CFO” throughout.  

 3 
7. Through the above conduct and material misstatements and omissions, GrubMarket 
violated Sections 17(a)(2) and 17(a)(3) of the Securities Act. 
 
Respondent 
 
8. GrubMarket, Inc. is a fresh produce and meat provider that uses its proprietary 
technology and eCommerce platform to serve business customers and end consumers. GrubMarket 
is a private company incorporated in Delaware in 2014, with its principal place of business in San 
Francisco, California.   
 
Facts 
 
Background 
 
9. GrubMarket was founded in 2014 with the goal of digitizing the food supply chain 
industry by developing its proprietary software and eCommerce technology and acquiring produce 
and meat wholesalers – many of which were small, family-owned-and-operated businesses – and 
incorporating the proprietary software and eCommerce technology into their business practices.  
 
10. Within a year of its founding, GrubMarket began expanding its operations by 
acquiring produce and meat wholesalers.  From 2015 through 2020, GrubMarket acquired 
approximately thirty such wholesale operations.  The accounting systems at the acquired 
wholesalers ranged from QuickBooks or other accounting software to paper records.  After 
GrubMarket acquired the wholesale operations, they typically retained their business names and 
continued to be managed by the former owners. 
 
11. To fund these acquisitions and other operations, GrubMarket raised approximately 
$140 million from private investors between 2014 and February 2021 across six fundraising 
rounds.  In connection with this fundraising, GrubMarket provided investors with certain materials, 
such as its investor presentations and financial information, which included wholesaler- and 
segment-level revenues, consolidated financial statements, financial projections, and key 
performance indicator metrics that investors requested.   
 
12. Between 2015 and February 2021, the financial information that GrubMarket 
provided to investors was prepared by Employee A and authorized by the CEO to be sent to 
investors (the “working financial information”).  Employee A did not interact with investors. 
   
13. In June 2019, five months before its Series D round began, GrubMarket hired the 
CFO to formalize the Company’s accounting process and to prepare for an audit of the Company’s 
financial statements in advance of a potential IPO.  Shortly after joining GrubMarket, the CFO 
determined that she could not independently verify the working financial information.  Over the 
next eighteen months, the CFO worked with multiple third-party accounting consultants to develop 
a supportable and traceable set of GrubMarket financials (the “revised financial information”). 
 

 4 
14. By 2020, the CFO’s work on the revised financial information began to reveal 
material differences from the working financial information.  But as Employee A and the CFO 
rarely communicated about their work, the CFO did not understand how Employee A prepared the 
working financial information.  Likewise, Employee A was not aware that the CFO’s revised 
financial information was materially different from the working financial information. 
 
15.  GrubMarket continued using the working financial information to solicit Series D 
investors.  
 
GrubMarket Used Unreliable Financials to Raise $80 Million from Series D Investors 
 
16. Employee A prepared the working financial information for investors on an ad-hoc 
basis, updating it whenever an investor requested GrubMarket’s financial information.  To prepare 
the working financial information provided to investors, Employee A reviewed bank statements 
and accounting records for the wholesalers on whatever accounting systems they used and spoke 
with managers for the wholesalers.  Employee A’s other responsibilities included overseeing 
operations and logistics, sourcing and packing produce, and managing payroll, human resources, 
insurance, and food safety.  Despite GrubMarket’s rapid growth, it continued to devote limited 
resources to the preparation of financial information that was shared with investors.     
 
17. Additionally, starting no later than early 2019, GrubMarket occasionally received 
financial information from certain of its independent wholesalers that was materially different from 
the wholesaler-level working financial information.  GrubMarket did not recognize that the 
wholesaler-level financial information it received called into question the accuracy of the working 
financial information that the Company provided to Series D investors.  
 
18. While GrubMarket was using the working financial information to solicit Series D 
investors, GrubMarket used preliminary versions of the revised financial information for other 
corporate purposes.   For example, between September 2019 and January 2021, GrubMarket used 
preliminary revised financial information to file GrubMarket’s federal and state tax returns and to 
seek lines of credit and venture debt.   
 
19. Because it was using the preliminary revised financial information – which cast 
doubt on the accuracy of the working financial information – for other corporate purposes, 
GrubMarket was negligent in continuing to use the working financial information to solicit Series 
D investors.   
 
GrubMarket Sold the Final Tranche of Series D After Sending Revised Financial 
Information to Series E Investors   
 
20. Between October 2020 and January 2021, GrubMarket exchanged phone calls and 
email communications with Investor A, an existing investor, about investing in the Series D round.  
It also provided to Investor A, as requested, the working financial information and other materials.  
Investor A incorporated the working financial information into its analysis in deciding whether to 

 5 
invest in GrubMarket.  In January 2021, Investor A committed to invest $19 million in the Series D 
round and informed GrubMarket that it would wire the funds in “early-mid February.” 
 
21. In early February 2021, GrubMarket shared the substantially completed, revised 
financial information with prospective investors in the upcoming Series E round.  The revised 
financial information showed materially lower revenue figures than were included in the working 
financial information that GrubMarket provided to investors in the Series D round, including to 
Investor A.   
 
22. GrubMarket did not immediately inform Investor A of the revised financial 
information.  As a result, when Investor A wired the $19 million Series D investment to 
GrubMarket in late February 2021, Investor A was unaware of the revised financial information.  
GrubMarket subsequently shared the revised financial information with Investor A and other 
existing investors.  
. 
23. The table below shows the magnitude of the difference between GrubMarket’s 
historical annual revenues stated in the working financial information versus those stated in the 
revised financial information: 
 
GrubMarket Working Versus Revised Annual Revenue (millions) 
Year 2016 2017 2018 2019 2020 Total 
Working Financial Information 32 87 146 255 455 975 
Revised Financial Information 15 46 51 116 194 422 
Percent Overstatement 113% 89% 186% 120% 135% 131% 
 
GrubMarket Negligently Made Material Misstatements Concerning its Financial Condition  
 
24. Investors considered GrubMarket’s financial information as part of their investment 
decisions.  When GrubMarket solicited prospective investors during the Series D round, the first 
set of materials the investors sought, and which GrubMarket typically sent immediately after the 
parties signed a non-disclosure agreement, was an investor presentation that included 
GrubMarket’s historical revenue, consolidated and segment-level income statements, and the 
balance sheet and cash flow statement.  In making their investment decisions, prospective investors 
incorporated GrubMarket’s unreliable financial information into their analysis and investment 
committee memoranda. 
   
Violations 
 
25. As a result of the conduct described above, GrubMarket violated Section 17(a)(2) 
of the Securities Act, which proscribes, in the offer or sale of a security, obtaining “money or 
property by means of any untrue statement of a material fact or any omission to state a material 
fact necessary in order to make the statements made, in light of the circumstances under which 
they were made, not misleading.” In addition, GrubMarket also violated Section 17(a)(3) of the 
Securities Act, which proscribes, in the offer or sale of a security, engaging “in any transaction, 
practice, or course of business which operates or would operate as a fraud or deceit upon the 

 6 
purchaser.” A violation of these provisions does not require scienter and may rest on a finding of 
negligence. See Aaron v. SEC, 446 U.S. 680, 685 & 701-02 (1980). 
 
Remediation 
 
26. In determining to accept the Offer, the Commission considered the remedial 
measures undertaken by GrubMarket before the commencement of the Commission’s 
investigation, including retaining an outside audit firm and consultants to assist with devising and 
implementing a centralized accounting system that follows GAAP standards. 
  
IV. 
 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent GrubMarket’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
A. Pursuant to Section 8A of the Securities Act, Respondent GrubMarket cease and 
desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 
17(a)(3) of the Securities Act.  
 
B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $8,000,000.00 to the Securities and Exchange Commission.  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. 
 
C. Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
GrubMarket as a Respondent in these proceedings, and the file number of these proceedings; a 

 7 
copy of the cover letter and check or money order must be sent to Mark Cave, Associate Director, 
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington, 
DC 20549.   
 
D. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is 
created for the penalty referenced in paragraph B above.  Amounts ordered to be paid as civil 
money penalties pursuant to this Order shall be treated as penalties paid to the government for all 
purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 
Respondent agrees that in any Related Investor Action, it shall not argue that it is entitled to, nor 
shall it benefit by, offset or reduction of any award of compensatory damages by the amount of any 
part of Respondent’s payment of a civil penalty in this action ("Penalty Offset").  If the court in any 
Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 
days after entry of a final order granting the Penalty Offset, notify the Commission's counsel in this 
action and pay the amount of the Penalty Offset to the Securities and Exchange Commission.  Such 
a payment shall not be deemed an additional civil penalty and shall not be deemed to change the 
amount of the civil penalty imposed in this proceeding.  For purposes of this paragraph, a "Related 
Investor Action" means a private damages action brought against Respondent by or on behalf of 
one or more investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES ACT OF 1933 

Release No. 11354 / January 17, 2025    
 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 4556 / January 17, 2025    

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22421 

 

In the Matter of 

 

GRUBMARKET, INC. 

 

Respondent. 

 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, MAKING FINDINGS, AND 

IMPOSING A CEASE-AND-DESIST 

ORDER 

  

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”), against GrubMarket, Inc. (“GrubMarket,” the “Company,” or 

“Respondent”).  

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 

of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 

which the Commission is a party and without admitting or denying the findings herein, except as to 

the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 

admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings 

Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-

Desist Order (“Order”), as set forth below.   

 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds that: 

 



 2 

Summary 

 

1. Between November 2019 and February 2021, GrubMarket raised approximately 

$80 million from investors in a Series D financing round (“Series D round”), after providing 

investors with financial statements and other financial information that materially overstated the 

Company’s historical revenues.  The financial statements were prepared by a now former 

GrubMarket employee with limited accounting experience, Employee A.  The financial statements 

purported to reflect the consolidated results of operations from dozens of independent wholesalers, 

some of which had rudimentary accounting systems.  GrubMarket was negligent in not disclosing 

that the financial statements and other financial information the Company provided to investors 

were unreliable. 

   

2. In June 2019, before kicking off marketing for the Series D round, and to improve 

its finance function, GrubMarket hired as its Corporate Controller a certified public accountant 

who had an audit background.  The Corporate Controller was promoted to the role of Chief 

Financial Officer in April 2020.1  

 

3. GrubMarket’s Chief Executive Officer tasked the CFO with creating a consistent 

accounting infrastructure for GrubMarket’s independent wholesalers and preparing a traceable and 

supportable set of financial statements to be audited in advance of a potential IPO.  Between fall 

2019 and February 2021, the CFO provided periodic updates to the CEO about her progress.  

During this time, GrubMarket also used preliminary revised lower revenue figures for other 

corporate purposes, including the filing of its federal and state income tax returns.  The CFO’s 

work, which ultimately resulted in material changes to GrubMarket’s financial information, 

continued throughout the Series D round, which closed in February 2021. 

 

4. The financial statements and other financial information that GrubMarket used to 

solicit Series D investors overstated revenue by more than $550 million, or about 130%, between 

2016 and 2020.  The financial statements and other financial information included revenues 

attributable to the Company’s independent wholesalers that did not match – and, in several cases, 

were materially higher than – the revenues the independent wholesalers had reported to 

GrubMarket.     

 

5. As a result, GrubMarket was negligent for providing to investors financial 

statements and other financial information that materially overstated its revenues.  

 

6. In January 2021, a Series D investor (“Investor A”) committed to invest $19 million 

in GrubMarket but had not yet wired the funds.  Thereafter, the revised revenue figures were 

substantially completed, and GrubMarket began using the revised financial information to solicit 

new investors for the “Series E” round.  GrubMarket negligently failed to inform Investor A of the 

existence of the revised financials before Investor A wired its $19 million investment.  

 

                                                 
1 For ease of reference, the employee is referred to as the “CFO” throughout.  



 3 

7. Through the above conduct and material misstatements and omissions, GrubMarket 

violated Sections 17(a)(2) and 17(a)(3) of the Securities Act. 

 

Respondent 

 

8. GrubMarket, Inc. is a fresh produce and meat provider that uses its proprietary 

technology and eCommerce platform to serve business customers and end consumers. GrubMarket 

is a private company incorporated in Delaware in 2014, with its principal place of business in San 

Francisco, California.   

 

Facts 

 

Background 

 

9. GrubMarket was founded in 2014 with the goal of digitizing the food supply chain 

industry by developing its proprietary software and eCommerce technology and acquiring produce 

and meat wholesalers – many of which were small, family-owned-and-operated businesses – and 

incorporating the proprietary software and eCommerce technology into their business practices.  

 

10. Within a year of its founding, GrubMarket began expanding its operations by 

acquiring produce and meat wholesalers.  From 2015 through 2020, GrubMarket acquired 

approximately thirty such wholesale operations.  The accounting systems at the acquired 

wholesalers ranged from QuickBooks or other accounting software to paper records.  After 

GrubMarket acquired the wholesale operations, they typically retained their business names and 

continued to be managed by the former owners. 

 

11. To fund these acquisitions and other operations, GrubMarket raised approximately 

$140 million from private investors between 2014 and February 2021 across six fundraising 

rounds.  In connection with this fundraising, GrubMarket provided investors with certain materials, 

such as its investor presentations and financial information, which included wholesaler- and 

segment-level revenues, consolidated financial statements, financial projections, and key 

performance indicator metrics that investors requested.   

 

12. Between 2015 and February 2021, the financial information that GrubMarket 

provided to investors was prepared by Employee A and authorized by the CEO to be sent to 

investors (the “working financial information”).  Employee A did not interact with investors. 

   

13. In June 2019, five months before its Series D round began, GrubMarket hired the 

CFO to formalize the Company’s accounting process and to prepare for an audit of the Company’s 

financial statements in advance of a potential IPO.  Shortly after joining GrubMarket, the CFO 

determined that she could not independently verify the working financial information.  Over the 

next eighteen months, the CFO worked with multiple third-party accounting consultants to develop 

a supportable and traceable set of GrubMarket financials (the “revised financial information”). 

 



 4 

14. By 2020, the CFO’s work on the revised financial information began to reveal 

material differences from the working financial information.  But as Employee A and the CFO 

rarely communicated about their work, the CFO did not understand how Employee A prepared the 

working financial information.  Likewise, Employee A was not aware that the CFO’s revised 

financial information was materially different from the working financial information. 

 

15.  GrubMarket continued using the working financial information to solicit Series D 

investors.  

 

GrubMarket Used Unreliable Financials to Raise $80 Million from Series D Investors 

 

16. Employee A prepared the working financial information for investors on an ad-hoc 

basis, updating it whenever an investor requested GrubMarket’s financial information.  To prepare 

the working financial information provided to investors, Employee A reviewed bank statements 

and accounting records for the wholesalers on whatever accounting systems they used and spoke 

with managers for the wholesalers.  Employee A’s other responsibilities included overseeing 

operations and logistics, sourcing and packing produce, and managing payroll, human resources, 

insurance, and food safety.  Despite GrubMarket’s rapid growth, it continued to devote limited 

resources to the preparation of financial information that was shared with investors.     

 

17. Additionally, starting no later than early 2019, GrubMarket occasionally received 

financial information from certain of its independent wholesalers that was materially different from 

the wholesaler-level working financial information.  GrubMarket did not recognize that the 

wholesaler-level financial information it received called into question the accuracy of the working 

financial information that the Company provided to Series D investors.  

 

18. While GrubMarket was using the working financial information to solicit Series D 

investors, GrubMarket used preliminary versions of the revised financial information for other 

corporate purposes.   For example, between September 2019 and January 2021, GrubMarket used 

preliminary revised financial information to file GrubMarket’s federal and state tax returns and to 

seek lines of credit and venture debt.   

 

19. Because it was using the preliminary revised financial information – which cast 

doubt on the accuracy of the working financial information – for other corporate purposes, 

GrubMarket was negligent in continuing to use the working financial information to solicit Series 

D investors.   

 

GrubMarket Sold the Final Tranche of Series D After Sending Revised Financial 

Information to Series E Investors   

 

20. Between October 2020 and January 2021, GrubMarket exchanged phone calls and 

email communications with Investor A, an existing investor, about investing in the Series D round.  

It also provided to Investor A, as requested, the working financial information and other materials.  

Investor A incorporated the working financial information into its analysis in deciding whether to 



 5 

invest in GrubMarket.  In January 2021, Investor A committed to invest $19 million in the Series D 

round and informed GrubMarket that it would wire the funds in “early-mid February.” 

 

21. In early February 2021, GrubMarket shared the substantially completed, revised 

financial information with prospective investors in the upcoming Series E round.  The revised 

financial information showed materially lower revenue figures than were included in the working 

financial information that GrubMarket provided to investors in the Series D round, including to 

Investor A.   

 

22. GrubMarket did not immediately inform Investor A of the revised financial 

information.  As a result, when Investor A wired the $19 million Series D investment to 

GrubMarket in late February 2021, Investor A was unaware of the revised financial information.  

GrubMarket subsequently shared the revised financial information with Investor A and other 

existing investors.  

. 

23. The table below shows the magnitude of the difference between GrubMarket’s 

historical annual revenues stated in the working financial information versus those stated in the 

revised financial information: 

 

GrubMarket Working Versus Revised Annual Revenue (millions) 

Year 2016 2017 2018 2019 2020 Total 

Working Financial Information 32 87 146 255 455 975 

Revised Financial Information 15 46 51 116 194 422 

Percent Overstatement 113% 89% 186% 120% 135% 131% 

 

GrubMarket Negligently Made Material Misstatements Concerning its Financial Condition  

 

24. Investors considered GrubMarket’s financial information as part of their investment 

decisions.  When GrubMarket solicited prospective investors during the Series D round, the first 

set of materials the investors sought, and which GrubMarket typically sent immediately after the 

parties signed a non-disclosure agreement, was an investor presentation that included 

GrubMarket’s historical revenue, consolidated and segment-level income statements, and the 

balance sheet and cash flow statement.  In making their investment decisions, prospective investors 

incorporated GrubMarket’s unreliable financial information into their analysis and investment 

committee memoranda. 

   

Violations 

 

25. As a result of the conduct described above, GrubMarket violated Section 17(a)(2) 

of the Securities Act, which proscribes, in the offer or sale of a security, obtaining “money or 

property by means of any untrue statement of a material fact or any omission to state a material 

fact necessary in order to make the statements made, in light of the circumstances under which 

they were made, not misleading.” In addition, GrubMarket also violated Section 17(a)(3) of the 

Securities Act, which proscribes, in the offer or sale of a security, engaging “in any transaction, 

practice, or course of business which operates or would operate as a fraud or deceit upon the 



 6 

purchaser.” A violation of these provisions does not require scienter and may rest on a finding of 

negligence. See Aaron v. SEC, 446 U.S. 680, 685 & 701-02 (1980). 

 

Remediation 

 

26. In determining to accept the Offer, the Commission considered the remedial 

measures undertaken by GrubMarket before the commencement of the Commission’s 

investigation, including retaining an outside audit firm and consultants to assist with devising and 

implementing a centralized accounting system that follows GAAP standards. 

  

IV. 

 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent GrubMarket’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

A. Pursuant to Section 8A of the Securities Act, Respondent GrubMarket cease and 

desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 

17(a)(3) of the Securities Act.  

 

B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $8,000,000.00 to the Securities and Exchange Commission.  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. 

 

C. Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

GrubMarket as a Respondent in these proceedings, and the file number of these proceedings; a 

http://www.sec.gov/about/offices/ofm.htm


 7 

copy of the cover letter and check or money order must be sent to Mark Cave, Associate Director, 

Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington, 

DC 20549.   

 

D. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is 

created for the penalty referenced in paragraph B above.  Amounts ordered to be paid as civil 

money penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 

Respondent agrees that in any Related Investor Action, it shall not argue that it is entitled to, nor 

shall it benefit by, offset or reduction of any award of compensatory damages by the amount of any 

part of Respondent’s payment of a civil penalty in this action ("Penalty Offset").  If the court in any 

Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 

days after entry of a final order granting the Penalty Offset, notify the Commission's counsel in this 

action and pay the amount of the Penalty Offset to the Securities and Exchange Commission.  Such 

a payment shall not be deemed an additional civil penalty and shall not be deemed to change the 

amount of the civil penalty imposed in this proceeding.  For purposes of this paragraph, a "Related 

Investor Action" means a private damages action brought against Respondent by or on behalf of 

one or more investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

Secretary 


	UNITED STATES OF AMERICA
	I.
	II.
	III.
	Summary
	Respondent
	Facts
	Background
	GrubMarket Used Unreliable Financials to Raise $80 Million from Series D Investors
	GrubMarket Sold the Final Tranche of Series D After Sending Revised Financial Information to Series E Investors
	GrubMarket Negligently Made Material Misstatements Concerning its Financial Condition

	Violations
	Remediation
	IV.