Alma Angotti, a former SEC Enforcement Attorney and Global Regulatory Risk Leader at the consulting firm Guidehouse, joined Closing Bell to discuss the SEC probe of Amazon's business practices related to third-party seller data, and whether it will have any impact.

Closing Bell

SEC Investigating Amazon's Business Practices

Welcome back to closing bell on cheddar news. Everyone, all the SCC is investigating amazon over how the company disclosed its third party seller data. The sec enforcement division reportedly requesting emails and communications from several amazon executives to learn more about its use of data from third party sellers on the platform. And this comes after a Wall Street journal investigation back in April of 2020 discovered Amazon employees frequently used third party seller data to develop its own branded products. Well, joining me now is Alma Angotti, former sec enforcement attorney and global regulatory risk leader at the consulting firm Guide House. Um thanks so much for coming on. What exactly is the sec investigating here? So the SCC is investigating whether or not amazon disclosed important material information to investors incorrectly, whether they misrepresented what they were telling investors how they were running their business. In this case, it's how they were using this third party seller data. And in this case, if they are found to be guilty here, what would the repercussions for amazon B well, so there are a variety of different charges that the sec could bring if they find that the company was deliberately misrepresenting the facts to investors. It could be a fraud charge if they find that it was, they can't prove the intent for fraud. It could be a non fraud charge. In any event they have a variety of remedies, they can bring an action in an administrative proceeding, they can bring an action in federal district Court, they can get penalties from amazon. If they go to federal district Court, they can get an injunction against further violations and in certain cases, the SEc may ask for disgorgement of unlawful profits that the company made through the fraud interesting. So I wonder to just how far this could go, Alma? Because I do see, Amazon says it did an internal investigation but has failed to deliver a report on that internal investigation to a congressional committee. Could we see a potential charge brought forward of obstructing Congress? Well, I believe that Congress has referred that to the Justice Department to um determine whether or not amazon was obstructing justice by not providing them with that report when they asked for it. So, so that's a definite possibility. And what does this do for amazon standing when it comes to lawmakers across the country, regulators, attorneys general looking to rein in big technology specifically, amazon, seemingly. This would not help amazon's case. No, it won't help amazon's case and all of the state attorney generals who want to protect their own consumers or their own third party sellers that amazon does business with might also bring investigations of their own on the piggybacking on what the sec is doing. What makes it so hard to hold these tech giants accountable. We always cover almost every day, right. How a different organizations, different regulators and lawmakers are investigating these companies. And certainly, we've seen our EU counterparts come down on Big Tech based here in the US much harder. What is the hold up here in the United States. So it's hard to say. Um, part of it may be that it can be very difficult to bring a case against a big company because they can create plausible deniability. Um, it's big and sprawling and it's easy for the government not to be able to find any particular person to be liable for something could be good lobbying. It could be a lot of different things interesting. Well, when it comes to amazon's own path, Alma, does this new leadership have any sway? Of course, we saw Jeff Bezos step aside from his role as ceo of the company in july of last year. And Andy Jassy has not been on the job just quite a full year, but we've seen at least the stock price take a different direction under Jassy, any indication as to how Jassy is navigating these waters now. Um, I haven't seen any indication. But it is not unusual. Uh, if there has been a compliance or regulatory or disclosure, if you had a company when there is new management, that's a selling point to the government not to bring their case. Look, we have new management, we've instituted new controls were cleaning house. This won't happen again. So that maybe the direction that, that they're taking. Mm hmm. I still though we have yet to see really any of these technology giants held accountable or punished in any sort of material impact to their bottom line. I think of the seed of facebook face pre pandemic that was really minimal when it was all said and done to its bottom line and its overall earnings. What makes it so challenging to really go after these technology giants successfully? I think they just have a lot of influence in society and it's it's always hard to take on the biggest players. Amazon facebook's parent company, meta google's parent company alphabet when it comes to of course the regulatory enforcement action on the horizon. Alma, any of these companies that stand out to you that could potentially face bigger punishment or more restrictions, more reining in than others. Um I don't see it. I haven't seen anything yet. It's always possible and it may well come up in the context of the antitrust investigations more than even um securities fraud or other kinds of issues because that's really the issue is how much market power they have. Alma and Gotti, former sec enforcement attorney and global regulatory risk leader at the consulting firm guide. How's Alma? We appreciate it. Thank you