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SEC Investigating GT Advanced's Trading Activity

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Apr 12, 2001
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It appears the United States Securities and Exchange Commission has launched an inquiry into GT Advanced's trading activity, according to a new filing released today.

The SEC sent a letter to GT Advanced on October 15, letting the company know that it was seeking "certain information regarding trading activity in the Company's securities," along with more information on its sapphire business and securities offering dating back to January 1, 2013.

Shortly after GT Advanced filed for Chapter 11 bankruptcy protection, it became clear that GT's CEO Thomas Gutierrez and COO Daniel Squiller had been selling off large amounts of stock, with some of the plans put in place just after production troubles surfaced in February 2014.

gtstock-800x534.jpg
Gutierrez sold off 9,000 shares of GT Advanced stock a day before the iPhone 6 was announced as part of a pre-arranged Rule 10b5-1 Plan enacted in March. He earned $160,000 from that particular sale, but had also sold shares on several other occasions in 2014, netting more than 10 million dollars. Comparatively, Gutierrez sold no stock in 2013, ahead of the company's Apple deal.

Squiller sold $1.2 million worth of stock in May, and made plans to sell off additional shares throughout 2014, garnering an additional $750,000 before the company's October bankruptcy filing, and it appears that the well-timed divestitures have roused suspicion with the SEC.

After GT Advanced inked a deal with Apple in 2013, its stock began to rise significantly on rumors suggesting Apple would use the company's sapphire in its iPhone 6 and 6 Plus. Stock prices went on to fall more than 1/3 in September after it became clear Apple had not opted to use sapphire for the devices.

According to court documents and leaked information, the deal between Apple and GT Advanced soured over the latter company's inability to hit necessary milestones and the strict contract terms that Apple imposed on GT. Additional court documents were recently unsealed, and new details on the relationship could come to light as soon as tomorrow.

The two companies have already signed an agreement to dissolve their relationship, with GT Advanced planning to decommission and sell off furnaces to repay the $440 million it was loaned from Apple. GT has already begun shutting down its Arizona plant, with a final shutdown planned for December 31.

Article Link: SEC Investigating GT Advanced's Trading Activity
 
Article Link
https://www.macrumors.com/2014/11/06/sec-investigating-gt-advanceds-trading-activity/
Patriot24

Patriot24

macrumors 68030
Dec 29, 2010
2,813
805
California
It is a good thing these guys made some money off of their (maybe illegal) stock dumps. I can't imagine many companies are going to want to work with them after everything that has happened.

Geez.
 
Rudy69

Rudy69

macrumors 6502a
Mar 30, 2009
790
2,415
Patriot24 said:
It is a good thing these guys made some money off of their (maybe illegal) stock dumps. I can't imagine many companies are going to want to work with them after everything that has happened.

Geez.
Click to expand...

Maybe illegal? They knew their house of card was about to collapse a long time ago and the "scheduled" sell off was planned a long time ago to happen when the stock would be at its highest. I wouldn't be surprised if they pumped rumours regarding the iPhone6 using sapphire displays to hype up their stock even more.
 
jm001

jm001

macrumors 6502a
Sep 19, 2011
596
123
WHAT?! Wow that was out of the blue! Never saw that coming...:rolleyes:
 
mw360

mw360

macrumors 68020
Aug 15, 2010
2,032
2,395
Could we get someone who knows nothing at all about insider trading laws to offer some commentary on this?
 
P

ptb42

macrumors 6502a
Oct 14, 2011
703
184
According to documents filed with the SEC back in March (by the CEO) and even in December by other top GT executives, the sales were made by a third party, and the owners had no control over the timing.

Unless the SEC can make the case that GT executives knew about the problem back then, and knew the problems couldn't/wouldn't be solved, they can't prove insider trading.

Another possibility is that the third party executing the sale orders was provided insider information by the GT executives. But, I don't know if the SEC can prove that unless someone confesses.
 
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mdelvecchio

mdelvecchio

macrumors 68040
Sep 3, 2010
3,151
1,149
Rudy69 said:
Maybe illegal? They knew their house of card was about to collapse a long time ago and the "scheduled" sell off was planned a long time ago to happen when the stock would be at its highest. I wouldn't be surprised if they pumped rumours regarding the iPhone6 using sapphire displays to hype up their stock even more.
Click to expand...

ah so youre an investigator on the case and know these the be the facts youre presenting them as? or are you just pretending you are?

just sayin.
 
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J

jhwalker

macrumors 6502
May 31, 2011
379
696
I'm not sure about this one - I have a stock management strategy where I sell certain stocks just before quarter end / year end announcements, because history has shown that's when those stocks are highest and that's when I can sell most profitably. That's just strategy to maximize profits, not illegal.

If they put the strategy in place beforehand (i.e., developed "triggers", handed management of transactions over to a third-party to take it out of their direct control, etc.), is that illegal?
 
gnasher729

gnasher729

Suspended
Nov 25, 2005
17,980
5,565
mw360 said:
Could we get someone who knows nothing at all about insider trading laws to offer some commentary on this?
Click to expand...

Not much to know really.

If you trade shares based on insider knowledge, you are in trouble.

The way around this if you are a permanent "insider" is to schedule share trades long time ahead. Like Tim Cook could schedule a sale of 100,000 AAPL shares for October 3rd, 2015. He then has to make that trade, even if he knows that news will get out on October 4th that sends the stock up, or if he knows that news will get out on October 2nd that sends the stock down, and selling on the 3rd is a really bad idea. (In my company most people are not allowed to trade between end of the quarter and two days after the quarterly results are released to the public).

Now the claim here is that these guys did schedule sales, but _after_ they already knew that the shares would drop. If the SEC can prove this, they are in trouble.
 
goobot

goobot

macrumors 603
Jun 26, 2009
6,484
4,374
long island NY
jhwalker said:
I'm not sure about this one - I have a stock management strategy where I sell certain stocks just before quarter end / year end announcements, because history has shown that's when those stocks are highest and that's when I can sell most profitably. That's just strategy to maximize profits, not illegal.

If they put the strategy in place beforehand (i.e., developed "triggers", handed management of transactions over to a third-party to take it out of their direct control, etc.), is that illegal?
Click to expand...

They sold it all the day before the iPhone 6 announcment.
 
B

bflowers

macrumors 6502a
Jul 19, 2006
636
136
All the good punishments like stockades and tar and feathers need to make a comeback. Maybe chain these guys out in front of the NYSE for a while, let people throw rotten produce at them.
 
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