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Thread: SEC Investigating for Insider Trading Due To Apple Supply Chain Stock News

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    #1

    SEC Investigating for Insider Trading Due To Apple Supply Chain Stock News


    This news is definitely not directly Android related, yet it seems very relevant to share considering it's news about its largest competitor. First, Apple's stocks recently took a negative hit upon hearing news that the company had to downgrade their original order of iPhone 5 parts by almost half, because of expected weak demand.

    Second, industry analysts supposedly received leaked info from Apple's supply chain that this was the case, and the stock market followed suit by "short-selling" Apple stock. (If you are unfamiliar with this investor term, it basically means that if you expect a stock price to fall, you can borrow the shares from a broker, and then sell them at current value. You do this in exchange for buying them at the lower price you expect them to hit.) This short-selling caused Apple's price to drop rapidly and it nearly fell bellow the $500 dollar mark.

    Since this occurrence, the SEC decided to get involved and is now investigating to determine if insider trading was a factor in these events. Apparently, the SEC is investigating these "channel checks" that are provided to stock analysts to try and reign in and keep a check on these behaviors. Here's a quote with some additional detail,

    Case in point - the rumor about diminished iPhone screen orders, while not confirmed by any official source today, and it couldn't be anyway, sent Apple's share price below $500 in premarket trading.

    That is why the SEC is cracking down on those analysts and their "industry sources", which might be someone working at Foxconn or other suppliers, but might as well be fabricated for the moment, or supplied to the "expert network" in the know for profit from the price swings.

    Research shops that have issued reports on Apple's supply chain are currently consulting with law firms, the Journal says, as the SEC is more interested whether there has been a break in confidentiality agreements, rather than whether the information from the supply chain sources has been confirmed and true. We'll see how it all pans out, but suppliers are usually the main source of rumors about upcoming handsets, so that well might be drier this year, if the SEC cracks down on intermediaries.
    Even if the SEC's investigation turns up no overt impropriety, the implications of this investigation are news "leaks" may diminish greatly for a while as the SEC puts pressure on the industry to shore up information security vulnerabilities. Sadly, this will likely lead to less rumors for a while on upcoming new devices.

    Source: PhoneArena
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    I'm a little torn on this. On the one side, rumors are fun. But on the other side, I'm in said industry, and I get sick and tired of seeing these "expert" analysts with their sometimes baseless predictions. If this cracks down on the latter at the expense of the former, I'll deal with the lack of rumors for awhile.
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    Here's an interesting follow-up article that sheds additional light on the subject: UBS: Apple cutting orders for Apple iPhone 5 parts is old news; shares rebound after breaking $500

    This makes one wonder about insider-trading even further. Either that, or someone at the WSJ doesn't do a very good job at fact-checking...
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    Quote Originally Posted by dgstorm View Post
    Here's an interesting follow-up article that sheds additional light on the subject: UBS: Apple cutting orders for Apple iPhone 5 parts is old news; shares rebound after breaking $500

    This makes one wonder about insider-trading even further. Either that, or someone at the WSJ doesn't do a very good job at fact-checking...
    I guarantee you it's both!
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    Re: SEC Investigating for Insider Trading Due To Apple Supply Chain Stock News

    Some traders bought an iPhone5 , thought about what they bought after looking at it, said to themselves "this thing sucks for supposedly being such a huge improvement" quickly got on the phone and said "we better sell off some stock because there's no way under the sun that parts order isn't going to get cut big time because this thing ain't gonna sell"
    No insider trading, just common sense taking over I'd bet

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    The one BIG reason the iPhone is still selling as well as it is, is because 80% of it's users have invested thousands of dollars into their system "app. music, movies", it is just not feasible to switch.
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    I for one hope the rumors are true, so that stock prices fall enough for me to be able to afford to buy some.
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    Quote Originally Posted by akhenax View Post
    I for one hope the rumors are true, so that stock prices fall enough for me to be able to afford to buy some.
    Funny you should mention that. I major in finance and can honestly tell you that stock price is overvalued by over 300%. Price/share is going to drop like a rock watch it happen.

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    Quote Originally Posted by jpiarull View Post
    Funny you should mention that. I major in finance and can honestly tell you that stock price is overvalued by over 300%. Price/share is going to drop like a rock watch it happen.

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    Doesn't that apply to most of the US equity market right now? Maybe not 300%... but significant over-valuation across the board.
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    #10

    Re: SEC Investigating for Insider Trading Due To Apple Supply Chain Stock News

    Quote Originally Posted by jntdroid View Post
    Doesn't that apply to most of the US equity market right now? Maybe not 300%... but significant over-valuation across the board.
    Yes

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