SEC effective against insider trading, example Apple corporate secretary

The Securities and Exchange Commission filed a lawsuit against Apple’s corporate secretary, Gene Levoff, alleging insider trading. The SEC said Levoff used his position to unlawfully trade Apple securities. On at least three occasions in 2015 and 2016, Levoff traded on the basis of insider information, and profited and avoided losses of approximately USD 382’000, the SEC says. Levoff was terminated by Apple in September 2018, the filing says.

Business News Channel CNBC reports that Levoff had inside access to not-yet-public earnings results and briefings on iPhone sales. In its complaint, the SEC also alleged he purchased Apple shares and then profited when the stock rose after positive earnings reports, and likewise sold shares prior to weaker earnings reports. 

The complaint states that Levoff was fired from Apple in September. In his position, he was responsible for Apple’s compliance with securities laws, and he also signed off on at least one Apple acquisition back in 2017.

More from the SEC file:

This matter concerns insider trading by Levoff, the Senior Director of Corporate Law and Corporate Secretary of Apple, Inc. (“Apple”). Levoff exploited his positions as a senior attorney and a member of Apple’s Disclosure Committee to unlawfully trade Apple securities ahead of Apple quarterly earnings announcements.

  1. In two key respects, Levoff’s misconduct violated the duty of trust and confidence he owed Apple and its shareholders. First, as head of the Corporate Law group at Apple, Levoff was responsible for ensuring compliance with the company’s insider trading policy and determining the criteria for those employees (including himself) restricted from trading around quarterly earnings announcements. At the same time, as a member of Apple’s Disclosure Committee, Levoff received material nonpublic information about Apple’s financial results. The Disclosure Committee reviews Apple’s periodic earnings results and draft public filings before that information is released to the public.
  2. On at least three occasions in 2015 and 2016, Levoff traded on the basis of insider information. For example, in July 2015 Levoff received material nonpublic financial data that showed Apple would miss analysts’ third quarter estimates for iPhone unit sales. Between July 17 and the public release of Apple’s quarterly earnings information on July 21, Levoff sold approximately $10 million dollars of Apple stock – virtually all of his Apple holdings – from his personal brokerage accounts. Apple’s stock dropped more than four percent when it publicly disclosed its quarterly financial data. By trading on this material nonpublic information, Levoff avoided approximately $345,000 in losses.
  3. Levoff breached his duty of confidentiality to Apple and its shareholders and exploited corporate information for his own benefit.
  4. Through his illegal insider trading in 2015-2016, Levoff profited and avoided losses of approximately $382,000.
  5. By engaging in this conduct, Levoff violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] and Section 17(a)(1) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)(1)]. Unless enjoined, Levoff is likely to commit such violations again in the future.
  6. The SEC brings this action against Levoff pursuant to Section 21A [15 U.S.C. § 78u-l] of the Exchange Act and Section 20(b) of the Securities Act [U.S.C. § 77t(b)] seeking a judgment from the Court: (a) enjoining Levoff from engaging in future violations of Section10(b) and Section 17(a); (b) ordering Levoff to disgorge an amount equal to the profits gained and losses avoided as a result of the actions described herein, with prejudgment interest; (c) ordering Levoff to pay a civil monetary penalty; and (d) prohibiting Levoff from serving as an officer or director of a public company

Gene Daniel Levoff, age 44, resides in San Carlos, California. From 2008 to
2013, he was Director of Corporate Law at Apple. From 2013 until his termination in September of 2018, he was Senior Director of Corporate Law at Apple, reporting directly to the General Counsel. Levoff also served on Apple’s Disclosure Committee from September 2008 to July 2018, including as chair of the committee from December 2012 to July 2018. Levoff previously held positions at a major law firm and another publicly-traded company.

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