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SEC probing Apple over $1 million purchasing scandal

post #1 of 42
Thread Starter 
The U.S. Securities Exchange Commission has implicated itself in a report detailing a series of internal purchasing violations of Apple products that cost the SEC as much as $1 million.

Reuters uncovered the report, which was filed by SEC Inspector General David Kotz in December 2010. Kotz, who serves as the agency's 'internal watchdog,' discovered "numerous problems" with both the purchased equipment and the procurement process, the report noted.

According to the probe, an Apple salesman convinced the SEC in 2008 that the storage firm Cloverleaf Communications could provide a more affordable solution to the agency's backup needs. The SEC then violated federal procedure by securing a no-bid contract with Cloverleaf. Cloverleaf was acquired by Dot Hill Systems in 2010.

After looking into the alternative options, Kotz found Cloverleaf's services "to be more expensive than other, better-known and less risky alternatives."

Kotz also discovered that the SEC had "improperly shared budget information" with Apple and proceeded with purchases before securing the proper approval and conducting reviews, according to the report.

While implementing the new technology, the SEC experienced numerous problems. Kotz noted that bugs in the installation were not worked out and the project "quickly went downhill from there." According to Kotz, one SEC supervisor even attempted to cover up the issue. After staff informed a superior of the problems, the supervisor reportedly told them "this information doesn't leave the room."

SEC spokesman John Nester said in statement that the agency agrees with Kotz's findings and is "taking steps to improve our policies and controls over purchases of information technology solutions, including pre-purchase review by management's technology and business oversight committees."

News of the budgetary improprieties comes as the SEC has requested a $222 million, or 16 percent, increase to its budget for the 2012 fiscal year, which begins Oct. 1. According to Reuters, Kotz's report could "provide ammunition" to Republican lawmakers seeking to block funding to the regulator.

Though Apple is no stranger to SEC investigations, the recent probe is unusual in that it involves the SEC investigating itself. In 2007, the SEC settled with Apple's former chief financial officer in an investigation alleging several of the company's executives had backdated stock options. The agency has also looked into suspected insider trading of Apple stock in years past.
post #2 of 42
I can't begin to understand what this is about. An "Apple salesman" sold the SEC on some third party solution that didn't work out? And the SEC didn't follow internal guidelines regarding bidding? And so Apple is under investigation? What?
They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.
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They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.
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post #3 of 42
One MEEEELION dollars [pinky to lips]. Somebody tell the SEC that's really not very much money anymore.
post #4 of 42
Who would listen to an "Apple salesman" regarding an enterprise storage solution? Maybe they get their catering guidance from the barrista at Starbucks too.
post #5 of 42
This takes the award for 'most bizarre story of the year.'
post #6 of 42
Seems ridiculous to me as well.

If the Apple salesman had recommended that they paint the walls pink and the SEC then hired a contractor to do so and it turned out there were bad chemicals in the paint that made some people ill, would they investigate Apple over that?

All this assumes that the salesperson had no financial interest in the deal.
post #7 of 42
How is it the fault of Apple if the SEC bought tech its IT department didn't know how to use?
post #8 of 42
Just the SEC?!?

What about the ACC? The Big Ten? The Ivy League? The Pac-10? This is an outrage!

post #9 of 42
If you read the statements made by anyone in the article except AppleInsider, none of them "implicate" Apple. They implicate themselves.

The first sentence is misleading. This is not Apple's problem at all.
post #10 of 42
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #11 of 42
Quote:
Originally Posted by cvaldes1831 View Post

Just the SEC?!?

What about the ACC? The Big Ten? The Ivy League? The Pac-10? This is an outrage!


Pac-12
post #12 of 42
Whoooooooosh! Well that just flew right over my head....
post #13 of 42
If you read the linked Reuters article it does say that Apple was involved. It says that Apple sold some equipment to the SEC (doesn't say what but maybe iPhones or iPads?) and possibly the SEC was looking for equipment to handle email and data storage. The Apple salesman probably suggested the other company as Apple is no longer in the server business. Apparently the SEC employee signed contracts for this equipment and services without putting out a bid.
post #14 of 42
The SEC violated federal regulations and is probing Apple to see if they can pin the blame on them for their own dumbass mistake.
post #15 of 42
Quote:
Originally Posted by AppleInsider View Post

... Apple is no stranger to SEC investigations...

Ask yourself why every single tech blog is reporting this story as "Apple being investigated by the SEC" when in fact there is no evidence that they are, and no evidence that they did anything untoward at all?

If you read the detail, you find out that the SEC is actually investigating itself, but the headline is "SEC probing Apple."

This is wildly irresponsible "journalism."
post #16 of 42
Quote:
Originally Posted by donarb View Post

If you read the linked Reuters article it does say that Apple was involved. It says that Apple sold some equipment to the SEC (doesn't say what but maybe iPhones or iPads?) and possibly the SEC was looking for equipment to handle email and data storage. The Apple salesman probably suggested the other company as Apple is no longer in the server business. Apparently the SEC employee signed contracts for this equipment and services without putting out a bid.

You disprove your own argument here.

Apple was of course "involved" in that they sold them hardware. That does not equate to Apple having anything to do with the "wrongdoing" part.

If you read the detail on the original report, all it indicates is that the SEC made a stupid purchase without checking into it first and violated a score of their own purchasing rules. What has that got to do with Apple?

Are we going to take Apple to court for selling products that someone doesn't like or find as useful as they thought they would? If it was your company, would you like the idea of this place and dozens of other tech blogs basically calling them guilty based on no evidence at all? If Apple wasn't doing so well financially right now, irresponsible stories like this could ruin their business.

/me longs for the days when journalists still roamed the plains.
post #17 of 42
This is another example of an article Headline that is supposed to catch attention! Link Bait is on of the terms I heard to describe this!!! The get traffic to their sites, and that helps them sell ads... Cheap trick... It'd be nice if Apple Insider didn't play that game, thus elevating their status, journalism standards. I hope they try such approach, and maybe they'll get a more traffic, with better quality feedback!

This article has holes in it, which is why it's confusing!

Go  Apple!!!

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Go  Apple!!!

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post #18 of 42
"link bait" and "irresponsible journalism" are being used allot around here lately. I kind of have to agree. bummer. \
turtles all the way up and turtles all the way down... infinite context means infinite possibility
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turtles all the way up and turtles all the way down... infinite context means infinite possibility
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post #19 of 42
That'll teach the SEC for investigating Apple.

"Mess with us will you?... Hey did you know about this company that has products and services that could save you a lot of money?"
post #20 of 42
This is ridiculous if you think about it for a moment. Kinda like asking for bids on an AppStore application.

I assume that they are backing up Apple systems if an Apple sales person was involved. If you know anything about Apple servers, the big backup vendors don't have products that cater to the OS X platform. I could see it going like this: "There is only one product that will do everything you need. It is product x." Then the SEC IT said: "We don't need to bid this since there is only one company that does what we need to do." Then they ran in to integration issues or lost data and now there is finger pointing. This probably has nothing to do with competition because there isn't much in this space. There are only three main backup products for OS X and they each fill different niches. Basically there is ArchiWare PresSTORE, Atempo Time Navigator, and Bakbone Netvault. I've never heard of Cloverleaf, but they may have been the only product to do some specific thing they were looking for. All of these backup products are also fixed priced, so it does not make sense to bid these out anyway. Integration of this software is not fixed price, but it doesn't sound like that is what the article is referring to. Generally a certain number of hours is contracted to a service provider that then does the installation and training of technicians. All of the good service providers that are fully certified in these products generally bid at around the same fixed rate. If service didn't go out to bid for some reason (although it would be wrong for the SEC), it would have cost about the same. I think this is pretty typical in niche areas.

As far as not getting the proper approvals, that is a different story. What kind of approvals are necessary? Do they have a backup system approval department? Obviously they got the approvals for the funds. If they release funds for things that are not approved I think there are bigger problems at the SEC. There are always contracts that are written to deal with integration issues. This protects both the service provider and the client. If bugs were not resolved, generally the provider was not given important information by the client that affected integration (usually the client is exempt from those things in a contract) or the problem they were trying to solve changed by the time the project moved forward. Occasionally there are also waivers in the contract if the provider isn't comfortable with something. If the provider didn't honor their side of the contract they could be sued. This situation may have been caused by the supervisor or it may have been caused by general bureaucracy. Having been in some of these situations, I would say the latter is more likely.

It sounds like they are suggesting to cut the backup systems in the new budget to "save" money? Sounds like a typical idea coming from a politician. As long as it fails on the next guys watch right?

BTW: This was 2008. Way before the Xserve was discontinued.
post #21 of 42
Quote:
Originally Posted by Prof. Peabody View Post

Ask yourself why every single tech blog is reporting this story as "Apple being investigated by the SEC" when in fact there is no evidence that they are, and no evidence that they did anything untoward at all?

If you read the detail, you find out that the SEC is actually investigating itself, but the headline is "SEC probing Apple."

This is wildly irresponsible "journalism."

'Yellow Journalism" at its best.
post #22 of 42
Quote:
Originally Posted by solipsism View Post


exactly..... this article is so confusing written....

PC means personal computer.  

i have processing issues, mostly trying to get my ideas into speech and text.

if i say something confusing please tell me!

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PC means personal computer.  

i have processing issues, mostly trying to get my ideas into speech and text.

if i say something confusing please tell me!

Reply
post #23 of 42
"Though Apple is no stranger to SEC investigations, the recent probe is unusual in that it involves the SEC investigating itself."

Transparency is what has been in popular demand. 'Corporate governance' vs 'SEC governance' proves transparency in business is possible. How many corporate boys are making headlines for investigating themselves? SEC investigating itself is a score, not a minus. And, Apple seems to have displayed that nicely.
post #24 of 42
Quote:
Originally Posted by schmookwookie View Post

"Though Apple is no stranger to SEC investigations, the recent probe is unusual in that it involves the SEC investigating itself."

Transparency is what has been in popular demand. 'Corporate governance' vs 'SEC governance' proves transparency in business is possible. How many corporate boys are making headlines for investigating themselves? SEC investigating itself is a score, not a minus. And, Apple seems to have displayed that nicely.

It might be good, but this doesn't sound like a typical audit to me. It sounds like someone trying to find a scapegoat for what may have been a bureaucratic problem. Sounds like this is fallout from an integration disaster or backup failure then finding something while reviewing paper work and questioning employees. If the supervisor was truly being malicious then that is a different story. It just doesn't sound like it to me based on the small amount of information in the article. I don't see how funds could be released for something that was not approved. Maybe this is really a problem with the financial side of SEC.
post #25 of 42
Quote:
Originally Posted by AppleInsider View Post

The U.S. Securities Exchange Commission

The U.S. Securities and Exchange Commission ...

kee ryst. my first born for just one well crafted article out of this blog ...
"Personally, I would like nothing more than to thoroughly proof each and every word of my articles before posting. But I can't."

appleinsider's mike campbell, august 15, 2013
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"Personally, I would like nothing more than to thoroughly proof each and every word of my articles before posting. But I can't."

appleinsider's mike campbell, august 15, 2013
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post #26 of 42
Quote:
Originally Posted by Prof. Peabody View Post

Ask yourself why every single tech blog is reporting this story as "Apple being investigated by the SEC" when in fact there is no evidence that they are, and no evidence that they did anything untoward at all?

If you read the detail, you find out that the SEC is actually investigating itself, but the headline is "SEC probing Apple."

This is wildly irresponsible "journalism."

Quote:
Originally Posted by spliff monkey View Post

"link bait" and "irresponsible journalism" are being used allot around here lately. I kind of have to agree. bummer. \

Quote:
Originally Posted by nicolbolas View Post

exactly..... this article is so confusing written....

Well, we all know Apple is one top dog nowadays so it goes without saying if you want to be heard, include Apple name on all your stories regardless the relationship. It just shows that no one can command attention like Apple can. Samsung? Microsoft? Pah!
post #27 of 42
Quote:
Originally Posted by esummers View Post

It might be good, but this doesn't sound like a typical audit to me. It sounds like someone trying to find a scapegoat for what may have been a bureaucratic problem. Sounds like this is fallout from an integration disaster or backup failure then finding something while reviewing paper work and questioning employees. If the supervisor was truly being malicious then that is a different story. It just doesn't sound like it to me based on the small amount of information in the article. I don't see how funds could be released for something that was not approved. Maybe this is really a problem with the financial side of SEC.

One thing's for sure..inquiring minds wanna know.
post #28 of 42
Ah, I too like to probe myself every once in a while... Oops, TMI
post #29 of 42
Quote:
Originally Posted by magicj View Post

You can't understand the article because the actual events have been highly edited to make it appear Apple did nothing wrong. Key details missing from this AI article include:

● Apple had links to Cloverleaf
● Apple made a large number of additional purchases on behalf of the SEC. These purchases were done without going through the usual approval process.

I think, at this point, the AI bloggers are qualified for a job with The Huffington Post.

Unless this is followed by some bribery or undue influence claim against Apple or one of it's reps, the story really seems to be about SEC issues rather than Apple's.
melior diabolus quem scies
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melior diabolus quem scies
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post #30 of 42
I see teckstuds hand in this !!!


9
whats in a name ? 
beatles
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whats in a name ? 
beatles
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post #31 of 42
OMG!!!1!! Steve is going to Jail!!!11!!!
I've accomplished my childhood's dream: My job consists mainly of playing with toys all day long.
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I've accomplished my childhood's dream: My job consists mainly of playing with toys all day long.
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post #32 of 42
Quote:
Originally Posted by cvaldes1831 View Post

Just the SEC?!?

What about the ACC? The Big Ten? The Ivy League? The Pac-10? This is an outrage!


Quote:
Originally Posted by Champ View Post

Pac-12

My favorite has always been the WAC
"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -
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"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -
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post #33 of 42
Quote:
Originally Posted by brucep View Post

I see teckstuds hand in this !!!


9

Actually, DaHarder bought 9 of these Cloverleaf thingies -- for each member of his family.!

...I can hardly wait to see the pictures...
"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -
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"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -
Reply
post #34 of 42
deleted
post #35 of 42

You have fuckin' lost it!
post #36 of 42
Apple's role is they delivered a service they were paid for. Apple doesn't bribe anyone. If there was mismanagement at the SEC why bring Apple in except to create sensationalist headlines?

Nobody likes sensationalist headlines. They also attract trolls that don't read farther then the headline. Although admittedly some of the other Apple News sites were worse on this one.
post #37 of 42
Quote:
Originally Posted by malax View Post

Who would listen to an "Apple salesman" regarding an enterprise storage solution? Maybe they get their catering guidance from the barrista at Starbucks too.

Probably was actually a Sales Engineer. They have a technical background.
post #38 of 42
deleted
post #39 of 42
Quote:
Originally Posted by addabox View Post

I can't begin to understand what this is about. An "Apple salesman" sold the SEC on some third party solution that didn't work out? And the SEC didn't follow internal guidelines regarding bidding? And so Apple is under investigation? What?

That part does seem weird.

I can only venture that they went to Apple about the whole thing and the contact person said something like "that's not really something that we can do for ya. You should try a 3rd party place like uh, Cloverleaf." Fully expecting that person to do their own due diligence.

Such things could be why Apple refuses to name particular locations for anything. If you ask their Geniuses about places for repairs they can't/won't do they hand you a list of local Apple certified shops. But they won't name any one of them as the place to go. Creates liability. (Or at least that is the policy)

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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post #40 of 42
Quote:
Originally Posted by magicj View Post

You can't understand the article because the actual events have been highly edited to make it appear Apple did nothing wrong. Key details missing from this AI article include:

● Apple had links to Cloverleaf
● Apple made a large number of additional purchases on behalf of the SEC. These purchases were done without going through the usual approval process.

I think, at this point, the AI bloggers are qualified for a job with The Huffington Post.

And you know this how?

"A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." Douglas Adams

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"A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." Douglas Adams

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