SEC Suspicious, Opens Investigation

August 2009 will be remembered as something of a mixed bag for Apple (s aapl). There was Google Voicegate, and the backlash it generated from the tech press and public alike, culminating in questioning from the FCC. On the other hand, Mac OS X’s latest big cat was released, and that gave almost everyone something to be happy about.

But now, as August finally draws to a close, there’s news that some investors might have been a bit naughty in their dealings with Apple shares. And the Securities & Exchange Commission is very keen to get to the bottom of it.
Reporting yesterday in the Huffington Post, Dan Dorfman says that he has obtained copies of internal SEC documents from what he calls a “regulatory contact” that show the SEC is investigating trading that occurred in four very specific periods of time, suggesting that more than one violation in trading may have taken place. Wall Street sources, he writes, have speculated that:

“…the agency’s investigation likely centered on possible trading that may have been based on the illegal use of inside information involving three particular Apple-related developments.”

The SEC is asking very pointed questions. It wants to know:

  • Whether anyone got an illegal lead on precisely how sales were faring on key items in Apple’s highly successful Ipod product line.
  • Whether anyone was given a precise insight into the health of the company’s co-founder and CEO, Steve Jobs, a cancer survivor who took a six-month leave of absence last January and then received a liver transplant. Subsequent questions about the viability of his health then led to a great deal of volatility in Apple’s shares.
  • Whether anyone had exact knowledge of when specific releases would be made by the company with regard to Jobs’ health or Ipod sales and pretty much of an awareness, as well, as to what those announcements would say.

Dorfman adds that a trader told him that he saw “uncanny” trading taking place at Apple. “[I]t almost looked at times like the buyers and sellers were working at the company,” he quotes the trader as saying.
Coincidentally fortuitous buying and selling happens from time to time. But on four separate occasions? However this unfolds, you gotta admit that August has been a tumultuous month for the boys and girls in Cupertino.