Apple CEO Tim Cook could face SEC scrutiny for violating fair disclosure regulation

Posted:
in AAPL Investors edited August 2015
A private Monday morning email from Tim Cook to CNBC analyst Jim Cramer --?in which Cook revealed material information about his company's growth in China --?could land the Apple chief in hot water with the Securities and Exchange Commission.




Cook emailed Cramer early Monday in an attempt to allay Wall Street fears that China's continued economic slowdown would negatively impact Apple's growth in the country. Apple shares opened the day under $100, but quickly rebounded.

In the message, Cook wrote that Apple continued to see "strong growth" in China through the last two months and revealed accelerating iPhone activations as well as record Chinese App Store performance.

Not long after fellow CNBC anchor Carl Quintanilla posted the email to Twitter, many on Wall Street began questioning whether Cook had violated SEC Regulation FD. That regulation prohibits publicly-traded companies from disclosing material company information privately without simultaneously releasing it publicly:
The regulation provides that when an issuer, or person acting on its behalf, discloses material nonpublic information to certain enumerated persons (in general, securities market professionals and holders of the issuer's securities who may well trade on the basis of the information), it must make public disclosure of that information.
"I certainly could see, in some circumstances, where the SEC would want to review the conduct and think it is a violation of Reg FD," securities lawyer Bill Singer told MarketWatch. "It constitutes a disclosure giving certain individuals the benefit before it was percolated by the rest of the public, during a fast-moving, extraordinary market."

Even if the SEC does launch an investigation, Cook and Apple are unlikely to face a substantial penalty, if any. Regulation FD is one of the most oft-contested securities regulations on the books,?and Cook has no prior history of such shenanigans.
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Comments

  • Reply 1 of 76
    icoco3icoco3 Posts: 1,459member

    First, out all those on the inside who short the stock on normal days and pump out bad misleading press concerning Apples imminent doom.

  • Reply 2 of 76
    solipsismysolipsismy Posts: 5,099member
    :sigh:
  • Reply 3 of 76
    SpamSandwichSpamSandwich Posts: 31,125member

    Cook divulged nothing of importance with his communication to Cramer (of all people). It was all very bland and free of numbers.

     

    On the other hand, Cook should never talk to circus monkey Cramer anyway.

  • Reply 4 of 76
    sdw2001sdw2001 Posts: 17,035member
    Ridiculous. He didn't disclose anything of substance other than the very nebulous "accelerating iPhone activations." What the hell does that mean? When [B]wouldn't[/B] that be true? No way the SEC says anything other than "hey, watch what you say to private parties."
  • Reply 5 of 76
    rogifanrogifan Posts: 10,669member
    Note that this is coming from Marketwatch one of the most anti-Apple financial sites on the web. I don't think a day goes by that they don't publish something bearsish on Apple.
  • Reply 6 of 76
    jfc1138jfc1138 Posts: 3,090member

    "material nonpublic information", not much "material" in Cook's interpretation of how his company's products are doing in China. Had he dropped NUMBERS on Cramer, then perhaps, but adjectives? "strong", "accelerating", "record"? Nope.

  • Reply 7 of 76
    SpamSandwichSpamSandwich Posts: 31,125member
    Quote:

    Originally Posted by Rogifan View Post



    Note that this is coming from Marketwatch one of the most anti-Apple financial sites on the web. I don't think a day goes by that they don't publish something bearsish on Apple.



    That notoriously anti-Apple troll over at Zero Hedge (the guy with the pseudonym Tyler Durden) was also jumping all over Cook.

  • Reply 8 of 76
    sflocalsflocal Posts: 4,622member

    Hey SEC???  What about going after Cramer after publicly admitting he would put out false Apple reports to manipulate AAPL??  Well??

  • Reply 9 of 76
    rogifanrogifan Posts: 10,669member
    hmm...So Tim had RSU's scheduled to vest today? Maybe not such a good day to respond from an optics perspective?

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  • Reply 10 of 76
    gregqgregq Posts: 62member
    I applaud AI the use of the use of the word "shenanigans" - love it :)
  • Reply 11 of 76
    sflocal wrote: »
    Hey SEC???  What about going after Cramer after publicly admitting he would put out false Apple reports to manipulate AAPL??  Well??


    I second this
  • Reply 12 of 76
    normmnormm Posts: 568member
    Quote:

    Originally Posted by Rogifan View Post



    hmm...So Tim had RSU's scheduled to vest today? Maybe not such a good day to respond from an optics perspective?

    He didn't sell any stock, so this is irrelevant. 

  • Reply 13 of 76
    ktappektappe Posts: 763member
    Quote:

    Originally Posted by SpamSandwich View Post

    Cook should never talk to circus monkey Cramer anyway.

    So much this. Of all people for Cook to interact with, why the hell did he choose Cramer?!?

  • Reply 14 of 76
    levilevi Posts: 344member
    Nothing of material was released (or at least nothing new). Also, it would seem it was Cook's intention that Cramer share the message publicly, which could constitute public release. There can be no other explanation.
  • Reply 15 of 76

    I saw the letter so it was public or does Wall St think public means something else? e.g. their lies?

  • Reply 16 of 76
    jungmarkjungmark Posts: 6,694member
    Much ado over nothing. Meanwhile analysts can make poor guesses and Apple gets hammered.
  • Reply 17 of 76
    davendaven Posts: 526member
    indiekiduk wrote: »
    I saw the letter so it was public or does Wall St think public means something else? e.g. their lies?

    No. I think the issue is that you are giving one person a heads up before giving the public at large the same heads up. Next time Apple may want to publish the email in the Apple PR section of their web site simultaneously with sending the message to Cramer. The sad thing is I just saw a news article claiming that the release was a desperate act to shore up the stock price to keep people from leaving Apple. The same site also bashed Apple when they didn't issue such statements so it is darned if you do and darned if you don't.
  • Reply 18 of 76
    SpamSandwichSpamSandwich Posts: 31,125member
    Quote:

    Originally Posted by ktappe View Post

     

    So much this. Of all people for Cook to interact with, why the hell did he choose Cramer?!?




    At least talk to Maria Bartiromo. I understand Joey Ramone was a big fan...

     

    image

  • Reply 19 of 76
    All Tim did was say, "no, our business is still doing good." Sounds like someone is mad that the normally tight lipped Apple came out and defended itself for once and caught them off guard.

    Good for you Tim
  • Reply 20 of 76
    Tim was ill advised to make those comments, especially when not asked. As for the idiots / experts who use gossip to manipulate stock, they don't work for the companies never mind run them so it is a take it or leave it thing with them.
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