SEC investigating GT Advanced sapphire business, securities trading
In an attachment to its quarterly 8-K filing, GT Advanced Technologies said the U.S. Securities and Exchange Commission is conducting an inquiry into the company's security trading practices and sapphire business.
According to the brief, the SEC informed GTAT of the inquiry in a letter dated Oct. 15, which also requested the company preserve and provide documents germane to the investigation.
At question is GT's securities offerings and general sapphire business going back to Jan. 1, 2013, months before the company announced it had struck a deal to supply Apple with the hard material. Apple was to pay $578 million to build out an advanced sapphire production facility in Mesa, Ariz., which GTAT would use to churn out product for future devices.
GTAT filed for Chapter 11 bankruptcy protection on Oct. 6, one week prior to the SEC's formal probe notice. Soon after the bankruptcy filing, which caused GTAT stock to dive over 90 percent, CEO Tom Gutierrez came under scrutiny for selling off $160,000 worth of company stock in early September. It is unclear if the action is part of the SEC probe.
In a statement last month, GTAT COO Daniel W. Squiller placed blame on Apple, saying the tech giant imposed "unsustainable" contract terms that resulted in a $461 million loss for the firm. Squiller cited higher than expected manufacturing costs, technical hangups and production deficiencies as main contributors to the deal's downfall.
According to the brief, the SEC informed GTAT of the inquiry in a letter dated Oct. 15, which also requested the company preserve and provide documents germane to the investigation.
At question is GT's securities offerings and general sapphire business going back to Jan. 1, 2013, months before the company announced it had struck a deal to supply Apple with the hard material. Apple was to pay $578 million to build out an advanced sapphire production facility in Mesa, Ariz., which GTAT would use to churn out product for future devices.
GTAT filed for Chapter 11 bankruptcy protection on Oct. 6, one week prior to the SEC's formal probe notice. Soon after the bankruptcy filing, which caused GTAT stock to dive over 90 percent, CEO Tom Gutierrez came under scrutiny for selling off $160,000 worth of company stock in early September. It is unclear if the action is part of the SEC probe.
In a statement last month, GTAT COO Daniel W. Squiller placed blame on Apple, saying the tech giant imposed "unsustainable" contract terms that resulted in a $461 million loss for the firm. Squiller cited higher than expected manufacturing costs, technical hangups and production deficiencies as main contributors to the deal's downfall.
Comments
Rut Roh, Raggy...
May have can be applied to pretty much anything. I think the sales are suspect but I'm not going to go Full Sog by accusing them of breaking the law without some compelling evidence. Now, claiming they acted in an unethical manner, that territory is more loose, ethics can vary from person to person, and I'd say wager there is something shady going on with the stated timeframes of sales, the statements of future output, and when they filed for bankruptcy.
Meanwhile Apple have been incredibly compromising to GT such as free premises rental, not enforcing advantageous contractual conditions, settling to a zero interest drawn out repayment plan and even agreeing to drop certain secrecy clauses from the settlement.
I think the SEC investigation will reveal just how bad GT have been.
He was just saying that bringing up criminal convictions and pardons for the Samsung CEO was just getting too personal.
May have can be applied to pretty much anything. I think the sales are suspect but I'm going to go Full Sog by accusing them of breaking the law without some evidence. Now, claiming they acted in an unethical manner, that territory is more loose, ethics can vary from person to person.
Yeah Sog was going nuts but he lost lots money on them. What I find interesting the SEC is going all the way back to the deal announcement was made and they told them to preserve all information related to the deal. Bankruptcy court which is civil, GTAT can not be easily be compelled to preserve all records and present them to the court to see what exactly happen when. The SEC will have a much clearer picture of what happen and when. The SEC is not required to share everything they know publicly during their investigation especial if management settle without going to court.
What I want to know, were the shares that were sold part of some automatic RCU grant that matured and had to be sold to pay tax liabilities. If so the timing was set long before things went bad. What I do not know is with RCU which get sold automatically can those be stop if management is aware of forthcoming bad news. Now if these were standard stock option which could be sold at any time with the exception of blackout dates this could be another matter. Most people are not aware of all the rules around insider trading and the various stock programs that exec have available to them.
He must 1) not have any money in Samsung, and 2) not think their CEO is gay.
Hopefully this will settle the issue. Something stinks about the whole deal.
Come on this stinks to high heaven. Yes they set up a plan to see these stocks over a couple of months starting in March but the fact that Thomas Guttierrez did all this leading up to his last stock sale the day BEFORE the iPhone 6 unveiling means he had no faith in his product being a part of that unveiling and KNOWS the stock will dive the day after.
If you follow GTAT news, there were rumors of production issues starting at the beginning of the year so they had a very good idea that this thing is not going to get off the ground at least not without some miracle. And it only becomes clearer and clearer and the date approached September and at no point did they disclose any of this to stockholders.
For them to assured the stockholders that everything is fine only 2 months earlier when clearly things are not is criminal. They should not be allowed to withhold that kind of information because of any trade agreement. When questioned about the last prepayment during the August earning call, they clearly stated that getting the prepayment on time or not is not going to be like "driving off a cliff" because they have enough liquidity. Obviously that's not the case and that's a clear case of willfully misleading their stockholders. The least that they can do is admit to the issues without stating exactly what the challenges are. There was no warning whatsoever even if you did all the research on the world so stockholders were hit blindsided with truck when GTAT announced the bankruptcy.
I would've went with a 'here come the judge' clip.
Hopefully this will settle the issue. Something stinks about the whole deal.
Regardless of their findings, the SEC investigation will likely result in more court activity, not less.
For sure, it most certainly will not end litigation.
If the SEC findings show improper behavior by one (or both) of the companies, you can be sure that there will be suits on behalf of the shareholders.
Looking at the time line, it would seem GTAT's CEO just took advantage of the early 2014 high stock price since he filed in March and sold shares in May and June - opportunist but likely within the rules. The later sale of shares looks suspect given their declaration of bankruptcy so soon after declaring in August all was rosey despite Apple refusing the last payment...they must have known well before then the likely scenario. Added to which is the fact that Apple tried to get them out of a hole at a late stage...so they must have at least informed Apple what was happening. They can't have it both ways.
All that will have to be established is if - at the time he sold his shares - the GTAT CEO knew that the business and financial prospects for the company were forecast to materially deteriorate. Assuming that this material information was not widely disclosed at the time to the investing public, then he committed the offense of insider trading.
All that will have to be established is if - at the time he sold his shares - the GTAT CEO knew that the business and financial prospects for the company were forecast to materially deteriorate. Assuming that this material information was not widely disclosed at the time to the investing public, then he committed the offense of insider trading.
This should be "At the time he submitted his irrevocable order to have his shares sold." If he can show that he set up a planned schedule of sales well before things fell apart, he should be off the hook. My (proverbial) money is on another outcome however.
Wot . . . no Sog?
Still GT claims that the contract they voluntarily signed off on was unreasonable, unsupportable, etc. Either incompetence or coercion is suggested, and GT management has, thus far, failed to show any indication of coercion by Apple.
let put it this way it only become burdensome once they realize they failed and Apple decide to walk away. It would have been the best deal ever if they were able to over come their issues. The future secret products were a huge success for Apple this company would have made out big time and no one would be complaining about this agreement.