Another GT Advanced executive sold $2M in stock after sapphire deal with Apple began to sour

Posted:
in General Discussion edited November 2014
Scrutiny over beleaguered Apple supplier GT Advanced Technologies continues to grow, with a new report highlighting that another high ranking official at the company sold nearly $2 million in stock after signs of trouble at its sapphire plant began to arise.

MesaGT Advanced Technologies' sapphire plant in Mesa, Ariz.


The sale of shares by Chief Operating Officer Daniel Squiller came after problems began to spring up at the Mesa, Ariz., sapphire plant, according to The Wall Street Journal. According to the report, the COO sold $1.2 million worth of stock in May, which came after Apple declined to make a final $139 million payment in April. Another $750,000 was sold before the bankruptcy filing.

Apple withheld the payment earlier this year after GT Advanced apparently could not meet its demands for sapphire, a scratch resistant material used on the iPhone and some models of the forthcoming Apple Watch. After Apple declined to make the payment, GT stood with just $85 million in cash as of Sept. 29, days before it filed for bankruptcy.

In all, Squiller sold 116,000 shares of GTAT stock this year worth just shy of $2 million total. He still owns some 230,000 shares that have lost considerable value since his company filed for bankruptcy.

Squiller's sale of GTAT shares is joined by Chief Executive Tom Gutierrez, who sold more than $10 million worth of stock this year. The CEO's sales came to light after it was discovered one transaction -- $160,000 worth -- occurred on Sept. 8, the day before Apple announced its new iPhone 6 lineup.

Hopeful observers speculated that Apple might include full sapphire screens on the iPhone 6 and iPhone 6 Plus, but the devices only feature the material on the Touch ID fingerprint sensor and rear camera lens. Shares of GTAT immediately began to tumble after the announcement, and plunged more than 90 percent after GT Advanced announced it had filed for bankruptcy last week.

The Journal portrayed Gutierrez's stock sale as suspect, noting that the CEO sold shares with "no obvious pattern." He hadn't sold any shares of GTAT in 2013 before offloading 70,000 this year beginning in May.




Apple's trouble with GT Advanced Technologies started as early as February, when it declined to make a third payment of $103 million. GT eventually received that money in April, but the final $139 million payment was never received.

As part of the bankruptcy proceedings, GT Advanced officials have suggested they feel the terms of their contract with Apple were unfair, going as far as to call the deal "oppressive and burdensome."

The proceedings have also shed some light on Apple's agreements with suppliers, revealing that the iPhone maker imposes a $50 million penalty for every time a partner leaks information about a future product.

GT Advanced entered into a $578 million deal with Apple a year ago for advanced sapphire supplies. The unexpected bankruptcy filing was a surprise even to Apple, which has pledged to try to keep the jobs it created at the Mesa, Ariz., plant.
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Comments

  • Reply 1 of 76
    slurpyslurpy Posts: 5,328member
    Quote:
    Originally Posted by sog35 View Post

     

    Like I've been saying these GTAT Executives are CROOKS and FRAUDS.

     

    The more truth that comes out the more you will see it.  Some of you here are just fools and are willing to give these idiots the benefit of the doubt that they don't deserve.


     

    Sog, with all due respect, it's not foolish to wait for actual facts to come to light before making final conclusions. It never is. They may be crooks or frauds, but that hasn't been proven. Or, maybe they just fucked up and the reason is incompetence, not malice. What's foolish is being so confident about labels without knowing the facts. 

     

    Not like it matters, whether you give them the benefit of the doubt or not will not affect anyone. 

  • Reply 2 of 76
    tommcintommcin Posts: 108member
    Looking like some had their noses deep into the trough. Now they are squealing that Apple forced them to make bad decisions. These two had a responsibility in the original deal with Apple and all the responsibility for selling their shares when they did.
  • Reply 3 of 76
    magman1979magman1979 Posts: 1,241member
    This whole situation REEKS of insider trading and fraud! Already in February, GT couldn't meet the contractual timetable, and Apple withheld a payment then until April...

    It will be interesting to read any additional details that come out of this scenario, and I'm hoping the WSJ request to have the proceedings made public is granted so we can learn the whole truth behind this.

    How much do you want to bet GTAT requested the publication ban in order to keep their dirty laundry away from public sight?
  • Reply 4 of 76
    hngfrhngfr Posts: 72member
    Quote:

    Originally Posted by AppleInsider View Post



    The proceedings have also shed some light on Apple's agreements with suppliers, revealing that the iPhone maker imposes a $50 million penalty for every time a partner leaks information about a future product.

     

     

    Again, this would also apply to LiquidMetal Technology Inc.

     

    A $50 million fine could bankrupt it.

  • Reply 5 of 76
    Quote:

    Originally Posted by sog35 View Post

     

    Like I've been saying these GTAT Executives are CROOKS and FRAUDS.

     

    The more truth that comes out the more you will see it.  Some of you here are just fools and are willing to give these idiots the benefit of the doubt that they don't deserve.


     

    I wouldn't be surprised if it goes deeper than just the stock sell off. GT could have been exaggerating how well the sapphire production was going making Apple think they were further along than they actually were in terms of ironing out problems and increasing yields.

  • Reply 6 of 76
    I don't think GTAT executives are crooks and frauds, I think they significantly over-estimated what they needed to make their dreams a reality. It sounds as if the process for getting the Mesa facility up and running was likely more expensive, and ran into more problems, than they anticipated. This put delivery deadlines in jeopardy, put them behind schedule, and therefore they failed to receive payments from Apple on time to continue operations. My guess is that they were not fully forthcoming to Apple about the problems, because Apple would have been willing to help them in order to keep the delivery schedule on track. But do you really want to help someone who isn't telling you the truth (or all of it)?
  • Reply 7 of 76

    All this story, plus the "Finland's PM blames Apple" mindset (which I don't think he was specifically doing) are making me think that "It's all Apple's fault" is the new "It's all Bush's fault"

  • Reply 8 of 76
    Quote:

    Originally Posted by sog35 View Post

     

    Like I've been saying these GTAT Executives are CROOKS and FRAUDS.

     

    The more truth that comes out the more you will see it.  Some of you here are just fools and are willing to give these idiots the benefit of the doubt that they don't deserve.


    Like those that gave them the benefit of the doubt and invested in them?

  • Reply 9 of 76

    Bankruptcy courts have the ability to claw back ill gotten gains made in advance of the filing, and those don't necessarily have to be criminally obtained gains.  

  • Reply 10 of 76
    Slurpy, based on the information we have, it appears that the GTAT execs were trading on insider information. Are we presumptuous to assume they knew what was going on between Apple and the company they run?

    To discuss how things went bad between Apple and GTAT would be speculation. Discussing whether or not those execs acted in bad faith by claiming their company was strong like a month ago while selling shares based on their insider knowledge that things were going badly - is informed by the facts we have.
  • Reply 11 of 76
    you never presented hard evidence when asked. You just wait for "reports" to roll in insinuating maybe criminal activity and call them crooks and liars.
  • Reply 12 of 76
    GT Advanced: Buy a bunch of furnaces for growing sapphire. Tell Apple they can do whatever they want and meet whatever requirements. Start missing deadlines and executives schedule stock to sell shortly before the iPhone announcement in September. Now that the executives have cashed out, declare bankruptcy and leave all your factory workers on the ropes. Sounds like the folks running GT Advanced were some quality individuals!
  • Reply 13 of 76
    If the contract was "oppressive and burdensome", why the hell did they agree to the deal? I think it's safe to assume they had lawyers to advise them.
  • Reply 14 of 76
    I wouldn't be surprised if it goes deeper than just the stock sell off. GT could have been exaggerating how well the sapphire production was going making Apple think they were further along than they actually were in terms of ironing out problems and increasing yields.

    Those stock sales do look shady and should be investigated. But I'm afraid your speculation will only fuel sog35's cathartic rants.
  • Reply 15 of 76
    gtrgtr Posts: 3,231member
    Man, I'm shattered about what's happened to GT Advanced.

    Yuk.

    Yuk.

    Yuk.
  • Reply 16 of 76
    foadfoad Posts: 708member
    Quote:

    Originally Posted by bizlaw View Post



    I don't think GTAT executives are crooks and frauds, I think they significantly over-estimated what they needed to make their dreams a reality. It sounds as if the process for getting the Mesa facility up and running was likely more expensive, and ran into more problems, than they anticipated. This put delivery deadlines in jeopardy, put them behind schedule, and therefore they failed to receive payments from Apple on time to continue operations. My guess is that they were not fully forthcoming to Apple about the problems, because Apple would have been willing to help them in order to keep the delivery schedule on track. But do you really want to help someone who isn't telling you the truth (or all of it)?



    The reason some folks are calling them frauds is not because of production issues, but because of selling large amounts of stock without being forthcoming to shareholders about those production issues. If they couldn't disclose material information due to NDAs, they should have withheld their stock sales. It is all speculation but from the looks of things, they knew things weren't going as planned and yet they still cashed out when the stock was riding high. If they took that material information and sold their shares in anticipation of the stock tanking, it would be illegal.

  • Reply 17 of 76
    bdkennedy1bdkennedy1 Posts: 1,459member

    I don't understand the scandal here. If I work at my company and I see it tanking, I'm going to sell my stock before it's worth nothing.

  • Reply 18 of 76
    foadfoad Posts: 708member
    Quote:

    Originally Posted by bdkennedy1 View Post

     

    I don't understand the scandal here. If I work at my company and I see it tanking, I'm going to sell my stock before it's worth nothing.




    Being an employee prohibits you from taking material information about your company and selling shares it in anticipation of a massive depreciation in the stock. It is the basis of insider trading.

  • Reply 19 of 76
    Quote:

    Originally Posted by DrDavid View Post





    Those stock sales do look shady and should be investigated. But I'm afraid your speculation will only fuel sog35's cathartic rants.

     

    I said exaggerate, not lie. People can exaggerate due to over-confidence in their ability to meet their goals (arrogance) or they can exaggerate for criminal gain.

  • Reply 20 of 76
    Quote:
    Originally Posted by williamh View Post



    Slurpy, based on the information we have, it appears that the GTAT execs were trading on insider information. Are we presumptuous to assume they knew what was going on between Apple and the company they run?

    The problem is, even if they knew in May that things were going sour with Apple, if theirs was part of a pre-planned, programmed sale (and done by a third party), there's probably not much the court can do. The courts could try and go after them for fraudulent conveyance, but that is very difficult to prove, unless it was obvious that they knew this was heading south at the time the stock sales were planned.

     

    As I've said elsewhere, the defining principle that courts use is the so-called 'business judgment rule', which gives a lot of the benefit of doubt to senior execs in the Anglo-American governance system. Why do you think, for instance, very few bankers have been found guilty despite the devastating financial crisis recently?

     

    It'll be interesting to see how this case develops.

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