GrubMarket, a private eCommerce food distributor, settled Securities and Exchange Commission charges that it violated antifraud provisions of the federal securities laws by providing investors with unreliable financial information.

The SEC alleged that while GrubMarket was soliciting prospective investors in a Series D round between November 2019 and February 2021, the firm emailed them information that it should have known was unreliable and overstated its historical revenues by about $550 million over a five-year period, the regulator said in a Friday (Jan. 17) press release.

At the same time the firm was giving investors that financial information, it was using other information -- showing lower historical revenue -- for other corporate purposes, such as tax filings, according to the release.

GrubMarket informed Series D investors about the discrepancy after the funding round closed, per the release.

To settle the charges, the company agreed to a cease-and-desist order and to pay a civil penalty of $8 million, according to the release.

"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," Mark Cave, associate director of the SEC's Division of Enforcement, said in the release. "That practice cannot be squared with the company's obligations to investors."

Reached by PYMNTS, a company spokesperson said in an emailed statement that the settlement resolves an investigation that the SEC began several years ago relating to GrubMarket's legacy financial systems and that the company "significantly upgraded" its systems before the investigation began.

"Over the past several years, GrubMarket has evolved and matured as an organization, including introducing a robust finance function and adopting best-in-class financial controls," the statement said. "We are pleased to have resolved this matter as we continue to position GrubMarket to capitalize on the exciting trends in food tech and eCommerce to take our business to the next level."

In an earlier, separate case, the SEC said in December that it settled charges with Express in which it alleged that the fashion retailer failed to disclose executive compensation paid to its now-former CEO in fiscal years 2019, 2020 and 2021.