Apple analysts part of SEC probe?

“Has the ‘channel check’ become a criminal act?” Susan Pulliam asks for The Wall Street Journal.

“Wall Street analysts have been left bewildered in recent days, as federal prosecutors begin to home in on insider-trading cases that appear to involve routinely published information about public-company supply chains,” Pulliam reports. “Case in point: Apple Inc., one of the hottest stocks of the past year, for which an entire industry of well-known and obscure analysts and ‘expert network’ scramble to report every detail of the company’s undisclosed production plans.”

Pulliam reports, “The proliferation of such research raises questions about where prosecutors will draw the lines that define insider trading… A few weeks [ago], Rodman & Redshaw issued a report to clients that was picked up by a popular website that compiles such reports. ‘Rodman’s supply chain checks indicate that monthly iPad production volumes are not expected to exceed much beyond 2 million units into year end.’ The report went on to say that street estimates for Apple’s December quarter ‘may end up being a stretch goal.’ Apple shares dropped sharply on the news, closing at $308.03, compared to $316.65 the day before.”

Full article here

MacDailyNews Take: Nail ’em to the wall.

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]

20 Comments

  1. Seriously?!? While I think analysts are off their collective nut most of the time and that they may sometimes try to manipulate Apple’s stock for their own gain, the government is going WAY to far. Busting them for using their research info is getting a little ridiculous. Admittedly, I don’t know too much about wall street (other than it can be the ugliest form of capitalism sometimes), but have we had enough control and intervention yet?!?

  2. If someone learns from an inside source, that abc inc is going to supply iPhone didly-woopers, then buys abc inc – that is insider trading. It is not fair to others who do not have privileged info.

    If they learn that Apple will increase iPad production to 200 million next year through insider information. Then trading would be illegal.

    Sounds reasonable to me.

  3. The government (and thus taxpayers) got fleeced by the Wall Street investment banks over the last couple years and we get criticism of channels checks? Seriously?

    There is no justice.

  4. Jmmx, I understand your reason, but how would you verify this and what really constitutes ‘insider trading’?

    If an analyst does research (let’s assume they do…), and he makes that information public, could that be insider trader?

    I’d say no, he does not use that info for personal gain, he uses it for public gain… That’s where I’d think the line is. Personal versus public.

    Same issue for journalists and press-freedom. Journalists are serving ‘the public’ and press-freedom is one of the most important parts of the constitution where news is gathered not for personal use, but brought out to inform the public.

    Can you classify an analyst as a journalist reporting financial information to the public?

    I’m sure you can uphold that part in court.

  5. “Seriously?!? While I think analysts are off their collective nut most of the time and that they may sometimes try to manipulate Apple’s stock for their own gain, the government is going WAY to far. Busting them for using their research info is getting a little ridiculous”

    This is not ‘research’ it’s insider information. All information should be public. They were trading on information no one else had. This is a good thing.

  6. Makes sense for the SEC to look into this, if only to provide clear guidance on when something is insider trading. Better for everybody to have clear rules. However, at present this seems to be nothing more than a WSJ blather-point: the linked video at the end basically has Atkinson explaining why there is nothing there, yet the teaser title claims that “stock research” will become “illegal.”

  7. So, employees are selling information to data gatherers who assemble it into some kind of report that analysts and brokers are keen to buy. The buy this stuff to gain an advantage so they can trade in various nefarious ways like short selling.

    It’s pretty much the same system as industrial espionage.

    The private investor has no chance of competing so is at the mercy of the manipulators.

  8. Analysts are allowed to gather information from public and not-so-public sources in order to provide information to the public at large or to the subscribers of their research.

    What analysts are not allowed to do is:
    1. Provide information to their firm’s traders, or one or two select clients, that they are not disclosing to the public at large or their subscriber list. This classic insider trading.
    2. Say one thing in public, yet tell something entirely different to traders, select clients, or subscribers. This fraud. See <a >Blodget, Henry</a>.

  9. The rules are actually clear on this, if the Analyst, Journalist, Blogger etc. take the time to read them. The Rules are if the Company itself has not disclose the information publicly, then you has a Wall Street Trader, Analyst etc. go to the company’s Suppliers and seek information about that company, it’s products or services that information is considered insider information. It’s even worse if you insight employees at the suppliers to violate non-disclosure agreements between the Company and the supplier. Because Apple’s Supply Chain is private (supply chain companies are not obligated to make information about Apple (it’s products etc.) available to the public at large under any Public Law) all supply chain information is therefore by de-facto owned by Apple. Therefore by default the information is classified as insider information. So, any analyst getting Apple supply chain information about Apple from Employee’s at supply chain companies is in fact getting and using Insider Information and should be prosecuted to the full extent of the law.

  10. Apple is most certainly under investigation as they don’t pay a dividend, so the only buyers of Apple stock are speculators, thus lends itself to heavy insider information tactics.

    All those who gave information about Apple to ThinkSecret and other “rumor” sites started selling their information to “expert networks” I have no doubt about that what so ever.

    A lot of people Apple hires are smart, and smart people know they are not going to secure their retirement “playing the game” at Apple (or any other corporation really) because it’s in a employers nature to let you think your going to retire successful and sh*t-can you a few years before retirement or even earlier if they can get a young starving kid out of college for less money, which there are plenty of today.

    Smart people figure this out right away, thus if they come across some juicy inside information they are smart enough to contact the right people, use encryption and other methods to secure some nice bundles of cash for themselves which they spend instead of their paychecks, over time their savings grow and who is going to say they weren’t just very frugal?

    Look, for Congressmen, insider trading is perfectly legal, they don’t pass laws on themselves to prevent it, so how the f*sk they think they are passing laws they don’t follow themselves?

    When you get over 35, nobody wants to hire you, if you haven’t secured your little nest egg by then you could very well be soon joining the ranks of the bums walking the streets and living under the bridges.

    That’s the new facts for America, it’s going to become a second rate economy compared to Asia.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.