SEC charges former Apple exec Gene Levoff with insider trading [u]

AppleInsider · February 13, 2019 5:25PM

The U.S. Securities and Exchange Commission has charged Apple's former director of corporate law, Gene Levoff, with insider trading based on his knowledge of corporate performance.

Levoff "traded on material nonpublic information about Apple's earnings three times during 2015 and 2016," the SEC said in a lawsuit filed through the U.S. District Court of New Jersey, reported by CNBC. "For the trading in 2015 and 2016, Levoff profited and avoided losses of approximately $382,000."

The executive is also accused of three additional incidents in 2011 and 2012.

Levoff took advantage of unreleased quarterly earnings data as well as internal updates on iPhone sales, the SEC explained, even violating the company's own "blackout" windows for stock transactions. He allegedly bought shares in time to profit from post-results spikes, or sold in advance if he knew numbers would disappoint investors. An irony is that Levoff was responsible for Apple's compliance with SEC rules.

The executive's history further includes helping to establish Apple Vietnam in 2015. At the time, he was also the director of Apple Operations International.

Update: Levoff's leave of absence was forced by Apple, after the company was told that the attorney was involved in insider trading.

"After being contacted by authorities last summer we conducted a thorough investigation with the help of outside legal experts," Apple told AppleInsider in a statement. "This resulted in termination."

Apple forced Levoff to go on leave in July 2018, and ultimately fired him in September.

MacPro · February 13, 2019 5:29PM

Did Apple execs know and hence firing or was there another reason?

Mike Wuerthele · February 13, 2019 5:31PM

MacPro said:

Did Apple execs know and hence firing or was there another reason?

We suspect they knew. We're trying to find out for sure.

MplsP · February 13, 2019 5:31PM

Yeah... kind of awkward to have a cheat in charge of rule compliance.

Glad Apple did the right thing by giving him the boot.

wdowell · February 13, 2019 5:52PM

You've got to hope the head of HR, Sorry, 'people', did everything right here.... Would be awkward timing for her if not..

maestro64 · February 13, 2019 6:00PM

Let see, he bought stock in the run up to earning and sold before the number came out which were neither good or bad, and he made a profit doing exactly what anyone else who follows apple has done. Gee I been doing similar things for the last 20 yrs on Apple so am I using inside information. I would like to see what information he specifically had that made a difference during this time periods. Now if they told me he sold at the end of Dec 2019 right before the earnings update that tanked the stock then I would say that was insider information.

Keep in mind he was making the trades when the market was predicting FUD on Apple. He knew the number were good, but he could not predict how much FUD the market was going to throw out.

I suspect what matter was he was trading during the blackout period that no exec is allow to do no matter how well or not so well a company is doing. These rules were designed to keep insiders from bailing right before bad news hit the market, not when good news is coming out and the stock is going up, but that is bad now too.

lkrupp · February 13, 2019 6:12PM

Tim Cook is a wimp. Fake Steve Jobs would have told Katie to send Moshe to deal with this, and it would not have been pretty.

ronn · February 13, 2019 6:16PM

Talk about idiocy! As the compliance officer, he had to know he'd get extra scrutiny. Greed knows no bounds. So not only does he get the boot from Apple, he is being prosecuted and no matter what, who would hire him after this? Criminals are the dumber than logs.

carnegie · February 13, 2019 6:28PM

maestro64 said:

Let see, he bought stock in the run up to earning and sold before the number came out which were neither good or bad, and he made a profit doing exactly what anyone else who follows apple has done. Gee I been doing similar things for the last 20 yrs on Apple so am I using inside information. I would like to see what information he specifically had that made a difference during this time periods. Now if they told me he sold at the end of Dec 2019 right before the earnings update that tanked the stock then I would say that was insider information.

Keep in mind he was making the trades when the market was predicting FUD on Apple. He knew the number were good, but he could not predict how much FUD the market was going to throw out.

I suspect what matter was he was trading during the blackout period that no exec is allow to do no matter how well or not so well a company is doing. These rules were designed to keep insiders from bailing right before bad news hit the market, not when good news is coming out and the stock is going up, but that is bad now too.

Among other things, it's alleged that he sold about $10 million worth of AAPL - almost all of his AAPL holdings at the time - between July 17th and July 21st of 2015. It's alleged that on July 17th he received material nonpublic information indicating that Apple had missed iPhone unit estimates in the previous quarter. On July 21st Apple reported the results for that quarter.

So, yeah, that would be classic insider trading.

lkrupp · February 13, 2019 6:31PM

ronn said:

Talk about idiocy! As the compliance officer, he had to know he'd get extra scrutiny. Greed knows no bounds. So not only does he get the boot from Apple, he is being prosecuted and no matter what, who would hire him after this? Criminals are the dumber than logs.

My daughter-in-law works as a forensic accountant for a major university. Her group is charged with uncovering the paper trails of employee’s who are suspected of theft or embezzlement. How big your salary is means little if you are a thief at heart. You are right in that these types think they will never be caught and somehow justify their thievery to themselves. Dumb just begins to explain it.

ericthehalfbee · February 13, 2019 6:35PM

MacPro said:

Did Apple execs know and hence firing or was there another reason?

More like they just found out and then fired immediately.

He wasn’t charged with cooking the books or doing anything illegal for Apple. He was charged for insider trading - meaning he used knowledge he had of Apple (because of his position) to trade stocks.

I highly doubt Apple knew anything about this for a period of time and kept it secret. That would come back as their worst PR nightmare.

boltsfan17 · February 13, 2019 6:40PM

maestro64 said:

Let see, he bought stock in the run up to earning and sold before the number came out which were neither good or bad, and he made a profit doing exactly what anyone else who follows apple has done. Gee I been doing similar things for the last 20 yrs on Apple so am I using inside information. I would like to see what information he specifically had that made a difference during this time periods. Now if they told me he sold at the end of Dec 2019 right before the earnings update that tanked the stock then I would say that was insider information.

Keep in mind he was making the trades when the market was predicting FUD on Apple. He knew the number were good, but he could not predict how much FUD the market was going to throw out.

I suspect what matter was he was trading during the blackout period that no exec is allow to do no matter how well or not so well a company is doing. These rules were designed to keep insiders from bailing right before bad news hit the market, not when good news is coming out and the stock is going up, but that is bad now too.

What you've been doing is not the same thing. Gene Levoff was trading based on non public information. He knew Apple's financial results well before they became public. If Wall Street was expecting so many iPhone's sold and Levoff knew ahead of time Apple wasn't going to deliver on expectations, it's pretty obvious the stock would drop after Apple publicly released that information. That's insider training. What's ironic is Levoff wrote some of the blackout rules for Apple.

carnegie · February 13, 2019 6:41PM

ericthehalfbee said:

MacPro said:

Did Apple execs know and hence firing or was there another reason?

More like they just found out and then fired immediately.

He wasn’t charged with cooking the books or doing anything illegal for Apple. He was charged for insider trading - meaning he used knowledge he had of Apple (because of his position) to trade stocks.

I highly doubt Apple knew anything about this for a period of time and kept it secret. That would come back as their worst PR nightmare.

Yeah, if Mr. Levoff was put on leave and then fired a couple months later, that suggests (to me at least) that his firing was related to this activity. When Apple found out about it, he was put on leave while Apple looked into the matter. Then, being sufficiently convinced that Mr. Levoff had acted illegally, Apple fired him.

That might not be what happened. But it's what I'd bet on, knowing what we now know.

MplsP · February 13, 2019 7:00PM

carnegie said:

ericthehalfbee said:

MacPro said:

Did Apple execs know and hence firing or was there another reason?

More like they just found out and then fired immediately.

He wasn’t charged with cooking the books or doing anything illegal for Apple. He was charged for insider trading - meaning he used knowledge he had of Apple (because of his position) to trade stocks.

I highly doubt Apple knew anything about this for a period of time and kept it secret. That would come back as their worst PR nightmare.

Yeah, if Mr. Levoff was put on leave and then fired a couple months later, that suggests (to me at least) that his firing was related to this activity. When Apple found out about it, he was put on leave while Apple looked into the matter. Then, being sufficiently convinced that Mr. Levoff had acted illegally, Apple fired him.

That might not be what happened. But it's what I'd bet on, knowing what we now know.

It certainly appears that way and that was my assumption as well. I certainly hope Apple didn't know about it.

StrangeDays · February 13, 2019 7:43PM

wdowell said:

You've got to hope the head of HR, Sorry, 'people', did everything right here.... Would be awkward timing for her if not..

“People” is actually a more correct term IMO, “human resources” is a corporate euphemism which devalues actual people in “resources”, like raw materials. It’s cold and dehumanizing. I like “people”.

Mike Wuerthele · February 13, 2019 7:56PM

MplsP said:

Yeah... kind of awkward to have a cheat in charge of rule compliance.

Glad Apple did the right thing by giving him the boot.

Yup, put on leave during the internal investigation, and fired. The story has been updated with a statement we've been given.

randominternetperson · February 13, 2019 8:48PM

lkrupp said:

ronn said:

Talk about idiocy! As the compliance officer, he had to know he'd get extra scrutiny. Greed knows no bounds. So not only does he get the boot from Apple, he is being prosecuted and no matter what, who would hire him after this? Criminals are the dumber than logs.

My daughter-in-law works as a forensic accountant for a major university. Her group is charged with uncovering the paper trails of employee’s who are suspected of theft or embezzlement. How big your salary is means little if you are a thief at heart. You are right in that these types think they will never be caught and somehow justify their thievery to themselves. Dumb just begins to explain it.

And yet I expect that only a tiny fraction of insider traders are ever suspected, let along convicted. The dumb, sloppy (or unlucky) ones are the ones who are caught.

randominternetperson · February 13, 2019 8:57PM

maestro64 said:

I suspect what matter was he was trading during the blackout period that no exec is allow to do no matter how well or not so well a company is doing. These rules were designed to keep insiders from bailing right before bad news hit the market, not when good news is coming out and the stock is going up, but that is bad now too.

The rules were designed to level the playing field, period. It is just as much about preventing insiders from buying before surprisingly good news is released as it is about them bailing before bad news is made public. And you hear stories about both types regularly. For example, lots of people learn about mergers before that information is made public. Everyone in that information chain knows that they aren't allowed to act on that information or share it with friends and family. I can only speculate about what percentage of people follow the letter and spirit of that law. I just know it's well above 0% (kudos to them; it must be sorely tempting).

dysamoria · February 13, 2019 9:27PM

ronn said:

Talk about idiocy! As the compliance officer, he had to know he'd get extra scrutiny. Greed knows no bounds. So not only does he get the boot from Apple, he is being prosecuted and no matter what, who would hire him after this? Criminals are the dumber than logs.

If only they were dumb enough to be filtered out of the workforce before making their way into high paying and influential job positions.

Education doesn’t prevent stupidity.

ronn · February 13, 2019 10:10PM

dysamoria said:

ronn said:

Talk about idiocy! As the compliance officer, he had to know he'd get extra scrutiny. Greed knows no bounds. So not only does he get the boot from Apple, he is being prosecuted and no matter what, who would hire him after this? Criminals are the dumber than logs.

If only they were dumb enough to be filtered out of the workforce before making their way into high paying and influential job positions.

Education doesn’t prevent stupidity.

Too often education causes stupidity.

chadbag · February 14, 2019 1:33AM

How dumb can one be? The article states he had illicit gains and loss-avoidance to the tune of $382k. Surely his salary and stock options were worth a lot more than that. Why risk the Golden Egg for relatieely low rewards.

SEC charges former Apple exec Gene Levoff with insider trading [u]

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