Apple Analysts Under Investigation about Insider Info
There may be a crackdown on Apple rumormongering in the months to come: stock analysts are being investigated by the US Securities and Exchange Commission over the "channel checks" with iDevice and Mac suppliers, according to a report in the Wall Street Journal
. No one has yet been charged, but the Journal's
Susan Pulliam indicates the SEC is looking to broaden the definition of insider trading.
"Insider trading basically comes down to where you know or ought to know that the person from whom you're getting this information has a duty to someone else to keep it confidential," Paul Atkins, a former commissioner for the SEC, told the Journal
. "If you go in and pay the mail clerk to give you special information, that's not proper." Because Apple is so secretive about when products will be released and how many are being manufactured, analysts especially rely on "channel checks" with its suppliers in order to gain insight on the company's future. As a result, analyst reports often have a significant impact on stock prices.
For example, the Journal
story talks about a report from Rodman & Redshaw which used supply chain checks to determine that only about 2 million iPads per month would be built this year. Apple stock dropped about 3 percent after the report was picked up in the tech media. And when RBC Capital Markets analyst Mahesh Sanganeria told his clients last week that Apple would stop making the current model of the iPad in January, it sent the stock down from $308.43 to $306.73 based on the idea that customers would hold off on buying iPads until the new model was released.
As a result of this investigation, companies are likely to hold off on channel checks, at least until the scope of the investigation is clear. So we probably won't see the wild proliferation of rumors about the second-generation iPad and Verizon iPhone, for example. And that's probably a good thing.