15.1 C
New York

Former Apple Lawyer Pleads Guilty to Insider Trading


A former senior lawyer at Apple who enforced its insider-trading policies pleaded guilty on Thursday to perpetrating an insider-trading scheme, which prosecutors said had involved making stock transactions before the corporate announced it fell in need of iPhone sales expectations.

In 2019, the Justice Department charged Gene Levoff, who was senior director of corporate law at Apple until he was fired in late 2018, with using nonpublic details about Apple’s financial results that helped him avoid losses and collect profits while illegally making trades ahead of the corporate’s earnings reports.

Between 2011 and 2016, Mr. Levoff avoided losses of $377,000 before Apple released bad news regarding its iPhone business and picked up profits of greater than $220,000 before it released excellent news, in keeping with documents filed in U.S. District Court in Newark. The transactions violated quarterly “blackout periods,” which prohibit trading by individuals with access to material nonpublic information.

In a 2015 example, Mr. Levoff sold $10 million of Apple stock before the corporate reported it might miss analysts’ unit sales estimates for the iPhone, helping him avoid losses when shares fell 4 percent on the disappointing quarterly results.

On several occasions, Mr. Levoff made the trades after sending an email to employees at Apple saying such trades are restricted, in keeping with the initial criticism. Apple’s insider-trading policy said any individual with material, nonpublic information in regards to the company was not allowed to trade until 60 hours after that information had been announced.

“This defendant exploited his position inside an organization strictly for financial gain that he wouldn’t have otherwise realized,” said Terence Reilly, the F.B.I.’s acting special agent for the Newark office, which led the investigation. “That’s called ‘gaming the system.’”

Mr. Levoff’s lawyer declined to comment. Apple didn’t reply to a request for comment.

In 2020, Mr. Levoff’s legal team filed a motion to dismiss the case, arguing that the criticism was unconstitutional because no law existed against insider trading. But Judge William Martini rejected the motion, saying that the argument was “incorrect” and that Congress passed laws to make sure “fair and honest markets.”

Before he was fired, Mr. Levoff reported to Apple’s general counsel. He was a part of the corporate’s disclosure committee, a bunch that helped prepare Tim Cook, Apple’s chief executive, and Luca Maestri, its chief financial officer, before quarterly disclosures to investors.

The counts of securities fraud in Mr. Levoff’s plea carry a maximum penalty of 20 years and a $5 million fantastic. Sentencing is scheduled for Nov. 10.

A separate suit by the Securities and Exchange Commission remains to be pending. The agency was in search of a judgment that might require Mr. Levoff to repay his gains from the trades.

Get the latest Sports Updates (Soccer, NBA, NFL, Hockey, Racing, etc.) and Breaking News From the United States, United Kingdom, and all around the world.

Related articles


Recent articles