iBusted: SEC Charges ex-Apple Exec
Well this is juicy: Apple’s former corporate secretary, who helped to craft the company’s policies against insider trading, has been charged by the Securities and Exchange Commission with insider trading.
Gene Daniel Levoff, a senior lawyer at Apple for 10 years and the company’s corporate secretary from 2013 until Apple fired him last September, allegedly used inside information he gained as chairman of Apple’s corporate disclosure committee (ugh) to trade ahead of three quarterly earnings announcements in 2015 and 2016.
The SEC says that insider trading netted Levoff $382,000 in combined profits and losses avoided, which almost enough money to buy a new MacBook Pro. Prosecutors filed their complaint in federal district court in New Jersey. They are seeking return of Levoff’s ill-gotten trading profits plus penalties and interest, and a permanent officer-and-director bar.
No word on whether Levoff, 44, would also be forced to use PCs for three to five years.
Anyway, let’s get to the whacky part. From 2013 onward, Levoff worked as Apple’s corporate secretary. In that role, he managed a legal team of more than 20 people and was responsible for Apple’s compliance with federal securities law — including, naturally, insider trading rules.
Actually, for insider trading issues, just go with company policy.
For example, Levoff maintained Apple’s “blackout list” of senior executives subject to trading restrictions near the company’s earnings announcements. He or his team decided which executives belonged on that list and sent quarterly email reminders to them about insider trading policy; and yes, Levoff himself was on the list too.
In 2015 Levoff even implemented an update to Apple’s insider trading policy, complete with him commenting on early drafts and circulating annotated versions for other senior executives to see. He then approved the final update, which said: “Never buy or sell stock when aware of information that has not been publicly announced and that could have a material effect on the value of the stock.” (That policy still stands today; it’s on Page 5 of Apple’s business conduct guidelines.)
At the same time, according to the SEC, Levoff was trading on his advanced knowledge of Apple’s financial results.
In July 2015, for example, Levoff sold 70,000 Apple shares in advance of an earnings release where iPhone sales had fallen short of market expectations. Those trades gave him gross proceeds of $10 million.
In October 2015, Levoff bought 10,000 Apple shares ahead of a more positive earnings announcement. When Apple reported its favorable results, the stock rose 4 percent. Levoff sold his shares two days after buying them, netting him an easy $4,700.
And so goes the SEC complaint from there, raising other allegations of insider trading in 2016, 2011, and 2012. The Justice Department also filed one charge of securities fraud against Levoff. That complaint outlines pretty much the same allegations the SEC brought, except a bit more detail in the specific trades Levoff made. He’s scheduled to appear in court on Feb. 20.
Worth noting that Apple itself has not been charged by either the SEC or the Justice Department. So as compliance officers have heard ad nauseam by now: strong policies, procedures, and training are crucial for a company to achieve effective compliance — even if all those efforts don’t stop someone truly determined to be, well, a bad apple.