Facepalm: Apple Lawyer Tasked With Insider Trading Prevention Busted For Insider Trading
The very person Apple appointed to enforce insider trading policies at the Cupertino outfit has admitted to engaging in an insider trading scheme that spanned five years, the US Department of Justice announced this week. He could potentially spend several decades in prison and fined millions of dollars, though that won't be known for another few months.
Gene Leveoff, 48, of San Carlos, California, served as Apple's top corporate attorney and also as the company's assistant secretary and corporate secretary. In addition, in his role as co-chairman of Apple's Disclosure Committee, he was tasked with reviewing and discussing the firm's draft quarterly and yearly earnings materials, as well as periodic Securities and Exchange (SEC) filings before they were publicly disclosed.
According to the DoJ, Levoff used the materials he was privy to in order to execute advantageous trades involving Apple's stock. This went on from February 2011 to April 2016, during which time Levoff amassed profits of around $227,000 on certain trades, and avoided losses of approximately $377,00 on other ones. Levoff pleaded guilty to six counts of securities fraud.
"Gene Levoff betrayed the trust of one of the world’s largest tech companies for his own financial gain," Attorney for the United States Khanna said. "Despite being responsible for enforcing Apple’s own ban on insider trading, Levoff used his position of trust to commit insider trading in order to line his own pockets. This Office will continue to prioritize securities fraud prosecutions."
As part of the scheme, the DoJ says Levoff ignored regularly quarterly "blackout periods" in which individuals with access to nonpublic information were not allowed to make stock trades. This is one of the rules he was tasked with enforcing, and instead the DoJ says he "repeatedly executed trades" that ran afoul of the rules. The DoJ says this occurred on several occasions.
"When Apple posted strong revenue and net profit for a given financial quarter, he purchased large quantities of stock, which he later sold for a profit once the market reacted to the news. When there were lower-than-anticipated revenue and net profit, Levoff sold large quantities of Apple stock, avoiding significant losses," the DoJ said.
Levoff could be looking at some serious prison time. Each of the six counts carries a maximum penalty of 20 years in jail and a $5 million fine. Sentencing is scheduled for November 10, 2022. He also faces a separate civil complaint by the SEC for the same infractions.