“Apple Inc. CEO Tim Cook’s decision to give a rare mid-quarter update on the company’s performance in a private email to CNBC’s Jim Cramer on Monday may have violated federal disclosure rules, lawyers said Monday,” Jennifer Booton reports for MarketWatch. “In the email, confirmed by Apple to MarketWatch, Cook said that iPhone activations have accelerated over the last few weeks, despite growing economic concerns in China and the government’s moves to devalue the Yuan. He also said Apple’s App Store recorded the best performance of the year in China during that time.”
“The private disclosure, which was tweeted out by CNBC reporter Carl Quintanilla and then read on air at CNBC, may have violated the Securities and Exchange Commission’s Fair Disclosure regulation, white-collar lawyers told MarketWatch,” Booton reports. “The rule, deemed murky and often contested by companies, addresses how publicly-traded companies disclose material non-public information to certain individuals or entities. ‘The SEC will undoubtedly want to take a look at this,’ said Thomas Gorman, a partner at Dorsey focusing on defending SEC and other regulatory investigations. At the very least, the SEC will contact Apple to seek context for the disclosure, he said.”
Booton reports, “In 2013, the SEC ruled that companies could make public disclosures on social media platforms such as Facebook Inc. and Twitter Inc.”
Read more in the full article here.
MacDailyNews Take: Technically, one can see how Jim Cramer, as the email recipient, was afforded a trading advantage no other Apple shareholders received in kind. Insider trading is the trading of a public company’s stock by individuals with access to nonpublic information about the company – which Cramer had from the minute he read the email until it was released by CNBC.
One might expect that Cramer would anticipate possible movement in AAPL after the public release of the email. Now, Cramer no longer trades stocks from his own funds, but does have a charitable trust that continues to buy and sell stocks. Therefore, his charitable trust could have benefitted for the information provided by Apple’s CEO. Of course, Cramer’s charitable trust could have not traded AAPL, which would eliminate any insider trading issue, we assume. Also, one could claim that Cramer is an analyst or a journalist, so would that remove any issues of impropriety?
One would expect that Cook ran this email by Apple lawyers first, but far stranger mistakes have happened, so we’ll have to wait and see if any issues actually materialize from this.
Bottom line: Even if no trades were made using this information, we’re left wondering how is this not a Regulation Fair Disclosure violation?
Apple, after big drop, leads recovery of Dow Jones Industrial Average – August 24, 2015
CEO Tim Cook to Jim Cramer: Apple is seeing strong growth in China through July, August – August 24, 2015
Apple crashes under $100 in pre-market trading as tech stocks set up for dismal day – August 24, 2015
Hmmm, Given that Cramer is a broadcaster on a public tv show… and he passed that info on to the public, …..
I would have to say only if the SCC is gunning for Apple no matter the law, would this be a case.
However, we all know the government is gunning for Apple starting from the federal judges to the patent office on down.
Again and again we see stranger abuses of the law by the government and they are doing it on purpose.
so sad. 🙁
The only ones that should be investigated by the SEC are those idiots that have been selling AAPL since it dipped below $120.
Investigated for what–insanity? The net result benefits you since you can buy for less.
Don’t think so. I believe the only requirement is for company announcements to be made widely or publicly. As Cramer is a national “talking head”, this should qualify as a fair news announcement. But SEC could nail Cramer if he acted in his own self-interest ahead of announcing Apple’s news publicly.
I can’t see it being a problem — the disclosure was to a journalist. (Even if I hate applying that label to Cramer.)
I agree and TC should keep doing this kind of things, burn all those SHORTS traders. Lots of people got burn today by Timmy.
The SEC investigation if any will probably extend to any immediate people connected to Jim Cramer.
The SEC has proven itself grossly incompetent and ineffectual in the recent past and might prefer the easy headlines going after Apple than the Bernie Madoffs who do the real damage. Typical of our boneheaded & misguided government. Combine that with Eric Holder & the DOJ and the real damage is done to the innocent while the obvious guilty are ignored, all in the prevailing whimsy of the current political passing winds.
Yea. Hey, SEC, never mind the analysts that report false negative news about Apple all day, week, month long and never get even a slap on the wrist.
Hit $100 just as I said. $85 soon.
Nah. Around $105 now at 11:20am PST. I think people aren’t that stupid to let others scoop up Apple bargains so easily. It’s leading the charge back up actually.
Way to go Timmy! Genius.
The interesting subsequent comment from Cramer during the Power Lunch segment is, “I just think that what matters is that we know that business is better than it was when it was at 133.”
It only takes a moment.
Ignore the trolls. I see no problem with the announcement. Apple could be held accountable and Cramer too, but I doubt he would be that dumb to act on this. Instead he did his job and made it public, for the rest of us.
The same SEC that allows the “machine trading front running”, the flash crash BS, the same morons that IGNORED Madoff after receiving specific info, the same morons who got Martha Stewart…….
Sorry the SEC clown car is full……………..
This guy can’t do ANYTHING right!
Tim Cook could F-up a perfect day in heaven.
And we’re actually surprised that Wall Street has no confidence in Apple?
The only thing this guy knows how to do is impose his rainbow agenda on everyone, which by the way has absolutely nothing to do with his job. Keep your sexual orientation to yourself and do your job for once. No one cares about your politics or your personal life.
Now we just can’t wait for you to get the boot.
The very definition of trolling. And not even very good trolling, at that. Come on, fella. Up your game. Try harder.
Steve couldn’t care less about AAPL and that’s what worked so good for more than 10 years.
Tim should know better or read about Steve’s history.
Tim is a sensitive individual an a proud one. Much more than Steve and I guess it is part of the problem now.
This is a complex question. It’s being labeled as a “private” e-mail. But was it. Was it expected that this would be disclosed shortly after it was received, or was it expected to be kept private? And what was the difference in time before reception and disclosure?
In theory, all disclosures must be made publicly, so that everyone has the advantage at the same time, assuming that they are paying attention. But as has been mentioned, some communications are exempt. Whether this one is allowed or not, I don’t know yet.
Elon Musk spoke up in defensed for Tesla whenever TSLA was in trouble all the times. That’s what a CEO got to do for the company.
“…white-collar lawyers told MarketWatch,”
Cramer contacted Tim Cook first, it was a reply.