Apple analysts under SEC investigation for 'channel checks'
The U.S. Securities Exchange Commission is investigating Wall Street analysts who cover Apple over the possibility that 'channel checks,' routine checks with suppliers and manufacturers, constitute insider trading.
Wall Street analysts were shocked recently when federal prosecutors began investigating them over routine supply chain research data, The Wall Street Journal reports. Though it appears that no analysts have been charged, the Securities and Exchange Commission probe is part of a broadening of the definition of insider trading.
"Insider trading basically comes down to where you know or ought to know that the person from whom you're getting this information has a duty to someone else to keep it confidential," said Paul Atkins, former commissioner for the SEC. "If you go in and pay the mail clerk to give you special information, that's not proper."
According to the report, the investigation centers around channel checks where analysts contact manufacturers' representatives "to gauge how a business is performing."
Channel checks are common among analysts covering Apple, who is known for being highly secretive about future plans or production figures. Analysts report information from channel checks to investors through "build plans," which have become almost as significant as Apple earnings.
"Expert network" firms, which charge a fee to investors for connecting them with employees of companies, are also part of the investigation.
As examples of channel checks, the Journal cited a recent RBC analyst report on increased iPad production and a Rodman & Redshaw report on low iPad production volumes that may have caused Apple shares to tumble.
Investors are "wary" and have been meeting with compliance officials and lawyers to gain clarity about the issue.
Last year, the SEC reportedly investigated four specific time periods in which suspicious trading activity of Apple stock took place. Trades made with inside information regarding iPod sales, the health of Apple CEO Steve Jobs, and the release of public information regarding either topic, were examined as part of the investigation.
Wall Street analysts were shocked recently when federal prosecutors began investigating them over routine supply chain research data, The Wall Street Journal reports. Though it appears that no analysts have been charged, the Securities and Exchange Commission probe is part of a broadening of the definition of insider trading.
"Insider trading basically comes down to where you know or ought to know that the person from whom you're getting this information has a duty to someone else to keep it confidential," said Paul Atkins, former commissioner for the SEC. "If you go in and pay the mail clerk to give you special information, that's not proper."
According to the report, the investigation centers around channel checks where analysts contact manufacturers' representatives "to gauge how a business is performing."
Channel checks are common among analysts covering Apple, who is known for being highly secretive about future plans or production figures. Analysts report information from channel checks to investors through "build plans," which have become almost as significant as Apple earnings.
"Expert network" firms, which charge a fee to investors for connecting them with employees of companies, are also part of the investigation.
As examples of channel checks, the Journal cited a recent RBC analyst report on increased iPad production and a Rodman & Redshaw report on low iPad production volumes that may have caused Apple shares to tumble.
Investors are "wary" and have been meeting with compliance officials and lawyers to gain clarity about the issue.
Last year, the SEC reportedly investigated four specific time periods in which suspicious trading activity of Apple stock took place. Trades made with inside information regarding iPod sales, the health of Apple CEO Steve Jobs, and the release of public information regarding either topic, were examined as part of the investigation.
Comments
It's not Apple analysts under investigation, it's Wall Street analysts who cover Apple.
Guys, you don't get to suspend the fundamentals of Journalism 101 just so you can write a catchy headline...
"Apple analysts under SEC investigation for 'channel checks'"
It's not Apple analysts under investigation, it's Wall Street analysts who cover Apple.
Guys, you don't get to suspend the fundamentals of Journalism 101 just so you can write a catchy headline...
hate to break your logic la la land party up, but they are two ways of saying the same thing. a wall street analyst who covers apple can also be referred to as an apple analyst.
Sure, if your only goal is generating page views.
hate to break your logic la la land party up, but they are two ways of saying the same thing. a wall street analyst who covers apple can also be referred to as an apple analyst.
Wrong.
Wall Street Analysts who specialize in Apple and other Fortune 100 companies... is the only way to parse it and be correct.
The other way implies Apple has a team of Wall Street Analysts on the pay roll.
Now it's payback time.
Common all you greedy bastard Apple Shareholders... sho me da money...
-luv Obama xoX
Hey, it's Chicago politics at it's best.
This is the US Government's way of shake'n Apple down for some coin. Steve probably said 'no' to him when he stopped in a month back.
Now it's payback time.
Common all you greedy bastard Apple Shareholders... sho me da money...
-luv Obama xoX
Hey, it's Chicago politics at it's best.
perhaps you would enjoy this site more?
http://www.englishclub.com/tefl/
Wrong.
Wall Street Analysts who specialize in Apple and other Fortune 100 companies... is the only way to parse it and be correct.
The other way implies Apple has a team of Wall Street Analysts on the pay roll.
I have to admit I thought it odd that I read iPad production was 'increased'. I know, and I'm not making this up, at least a dozen people that want to buy one that I told to wait. I own one. I picked it up the first day available. So rumors are that there's a gen2 in production and that apple increases production of gen1 didn't really make sense to me.
Part of the ramp up may be for Holiday presents and then the switch to the second gen model.
actually, if you work in the financial industry- it's one and the same thing. If you are an anal english teacher talking amongst other anal english teachers you might be right.
The AI headline is incredibly confusing for people who speak normal English. The financial industry doesn't fall in that category.
On topic, I wonder what the venerable Shaw Wu will do if the entire basis for his career becomes illegal?
This is the US Government's way of shake'n Apple down for some coin. Steve probably said 'no' to him when he stopped in a month back.
Now it's payback time.
Common all you greedy bastard Apple Shareholders... sho me da money...
-luv Obama xoX
Hey, it's Chicago politics at it's best.
Reading comprehension fail.
I can understand how checking with suppliers would seem like unfair insight into the plans and pulse of a company, but to call it 'insider trading' is a bit much. Going by the definition mentioned in the article the only sources of information for investors are information the company itself authorizes for release and the historical data of its past performance. Investors should be allowed the ability to receive a wider, more objective picture of a entity's worth and future than just the information the entity wishes to let them know.
Not at all. They are not talking about information that Apple releases or authorizes. They are investigating information that analysts get from contacts on the sly. The article mentioned talking to mail clerk for info. This would also include talking to someone in a firm who supplies parts to apple to get an idea of Apple's build rate.
Contrary to what the Obama hater is trying to say, Apple is surely fine with this. They go through great trouble to keep production info secret...
Ultimately stock holders need solid information about sales to value a company and understand customer acceptance of it's products. Waiting for quarterly reports leads to abuse by the management teams of public companies. Certainly there are recent example in the auto industry here and in the past in the computer industry. In fact it makes me wonder how a company can legally keep sales figures from stockholders.
Not at all. They are not talking about information that Apple releases or authorizes. They are investigating information that analysts get from contacts on the sly. The article mentioned talking to mail clerk for info. This would also include talking to someone in a firm who supplies parts to apple to get an idea of Apple's build rate.
Paying someone for insider information is always a problem.
Contrary to what the Obama hater is trying to say, Apple is surely fine with this. They go through great trouble to keep production info secret...
This is where I as a stockholder has huge problems. Sales figures really shouldn't be secrete, as investors have no ability to make informed decisions about the stock. Worst there is a history of management teams doing bad things when the data isn't that good. From the standpoint of an investor, waiting for quarterly reports is not acceptable.
As to the Obama hater one could see this as another element in what is becoming a very repressive government.