The Frank Fight Of Fintech: Industry Giant Vs Acquired Startup

The birth of the Fintech industry came about because of the availability of specialized tools and software designed to assist financial services. The term itself came about by merging ‘Financial + Technology’. The growth of technology gave rise to the multidirectional expansion of extremely specific tools or applications. This opened the door for a lot of startups to either grow and compete or cash in on their products by selling them to already established players.

Unfortunately, the advancement in technology didn’t resolve age-old problems of fudging accounts but instead, specialized tools helped it, or at least one would think JPMorgan Chase would feel so.

A while ago, JPMorgan Chase acquired a fintech startup, Frank, for $175 million. Now, they’re suing the 30-year-old founder, Charlie Javice, for alleged lies about the number of users claiming it to be a fake list that was fabricated to tempt them to buy the company.

TechDogs-"Image of JPMorgan Chase on a building (by Jonathan Weiss)"

Source

According to the lawsuit, Charlie Javice lied about having over 4 million users who had signed up on Frank to use the tools trying to apply for federal aid. Although, when JPMorgan Chase requested for proof as part of their verification process, the former founder fabricated a list of “fake customers – a list of names, addresses, dates of birth, and other personal information for 4.265 million ‘students’ who did not actually exist.” Additionally, JPMorgan Chase’s believes that in reality the company had less than 300,000 registered users.

Further excerpts from the complaint include “Javice first pushed back on JPMC’s request, arguing that she could not share her customer list due to privacy concerns.” It continues as “After JPMC insisted, Javice chose to invent several million Frank customer accounts out of whole cloth.”

Additionally, the Chief Growth Officer of Frank, Olivier Amar was also named in the complaint. As per the suit, the two asked a top engineer to create a fake list. Upon refusal, they approached “a data science professor at a New York City area college” for which he was paid $18,000. This included getting it validated by a third-party vendor. The complaint included screenshots of invoices and alleges Javice of tampering with documents. This further alleges that Amar spent $105,000 to purchase another set of data of 4.5 million students from ASL Marketing. JPMC claims that when it had sent emails to students in the list, only 1% were opened.

TechDogs-"Image of Frank Founder Charlie Javice"

Source

However, on the flip side, Charlie Javice filed a lawsuit against JPMorgan Chase in the same week JPMC did. Excerpts from Javice’s complaint include that JPMC “commenced a series of groundless investigations into Ms. Javice’s conduct,” and “manufactured a for-cause termination in bad faith” as well as “worked to force Ms. Javice out of the [JP Morgan] organization,” in an attempt to avoid compensating her with millions. According to the complaint, as per those investigations, JPMC “falsely accused Ms. Javice of misconduct” during and after the acquisition.

In an emailed statement to Forbes, Alex Spiro, Charlie Javice’s lawyer said, “After JPMC rushed to acquire Charlie's rocketship business, JPMC realized they couldn't work around existing student privacy laws, committed misconduct and then tried to retrade the deal,”and “Charlie blew the whistle and then sued. JPMC’s newest suit is nothing but a cover.”

Additionally, the complaint alleged JPMC couldn’t “harness Ms. Javice and Frank’s acumen for attracting a young, diverse new audience to Chase’s services” but instead went after “poorly conceived business plans” considering “Frank’s historical customers.” Further, “Chase grossly mismanaged its investment from the start, and it decided it would rather walk the investment back than work on it further.”

Javice and Amar, along with some other employees were hired by the bank but later they were let go, while some appear to still be employed. As far as Amar and ASL Marketing go, they are yet to respond.

While the use of technology, specialized software tools and applications have helped many grow, it has been noted on separate occasions that the same tools can be used for unlawful means.

What do you think of the alleged lawsuits on both sides and the positives and negatives of fintech? Let us know in the comments below!

First published on Fri, Feb 3, 2023

Enjoyed what you read? Great news – there’s a lot more to explore!

Dive into our content repository of the latest tech news, a diverse range of articles spanning introductory guides, product reviews, trends and more, along with engaging interviews, up-to-date AI blogs and hilarious tech memes!

Also explore our collection of branded insights via informative white papers, enlightening case studies, in-depth reports, educational videos and exciting events and webinars from leading global brands.

Head to the TechDogs homepage to Know Your World of technology today!

Disclaimer - Reference to any specific product, software or entity does not constitute an endorsement or recommendation by TechDogs nor should any data or content published be relied upon. The views expressed by TechDogs' members and guests are their own and their appearance on our site does not imply an endorsement of them or any entity they represent. Views and opinions expressed by TechDogs' Authors are those of the Authors and do not necessarily reflect the view of TechDogs or any of its officials. All information / content found on TechDogs' site may not necessarily be reviewed by individuals with the expertise to validate its completeness, accuracy and reliability.

Tags:

Fintech JPMorgan Chase JPMC Frank Startup Data Science

Join The Discussion

Financial Technology