Four Insiders Charged With Revealing Product Plans of Apple, Dell, and Others

[MacRumors]

Last month, we reported on an investigation by U.S. regulators into inside information on Apple and other companies' product plans being transmitted to research analysts in the form of "channel checks". At the time, the investigation had just yielded its first arrest, an analyst for a research firm known as Primary Global Research, although the analyst did not appear to have a connection to Apple.

The Wall Street Journal now reports that four additional corporate managers who worked with Primary Global Research on the side have also been charged in connection with the investigation. One of those managers, Walter Shimoon, worked for Apple supplier Flextronics and is alleged to have distributed information on the then-unreleased iPhone 4 and iPad.

In their most significant move yet in a sweeping insider-trading investigation, federal prosecutors charged four corporate managers with peddling financial details about prominent technology companies and with leaking secrets about popular consumer products such as Apple Inc.'s iPhone in exchange for cash.

"The information trafficked by the four 'consultants' went way beyond permissible market research," said Janice Fedarcyk, a Federal Bureau of Investigation assistant director in charge. "It was insider information."

Fortune summarizes the key information divulged by Shimoon to a "cooperating witness" for the federal government known as "CW-2".

During this conversation, secretly taped by the FBI and now entered into evidence, Shimoon allegedly gave CW-2 actual third quarter iPhone sales figures -- numbers that wouldn't be publicly released for another two and a half weeks and could, in theory, move the stock.

Then he dropped his two bombshells:

- Apple, he is heard telling CW-2, was "coming out next year" with a new iPhone that's "gonna have two cameras ... It'll be a neat phone because it's gonna have a five-megapixel auto-focus camera and it will have a VGA forward-facing videoconferencing camera." Apple announced the iPhone 4 -- with its two cameras -- eight months later.

- Then he is heard telling CW-2 that "they [Apple] have a code name for something new ... It's ... It's totally ... It's a new category altogether... It doesn't have a camera, what I figured out. So I speculated that it's probably a reader. ... Something like that. Um, let me tell you, it's a very secretive program ... It's called K, K48. That's the internal name. So, you can get, at Apple you can get fired for saying K48." The iPad -- code named K48 -- was unveiled four months later.

According to reports, Shimoon had signed a non-disclosure agreement with respect to his work with Apple through Flextronics, but revealed the information to Primary Global Research, which paid him more than $22,000 for his role as a "consultant" to the firm.

Other corporate managers arrested in conjunction with the information have been alleged to have shared inside information on a number of other companies including Dell, AMD, Seagate, and Western Digital. Federal regulators appear to still be working hard on the case, reportedly working to build cases against even larger Wall Street players including major hedge funds investing in the companies that saw their insider information leaked to outsiders.

Article Link: Four Insiders Charged With Revealing Apple Product Plans

 

[alm99]

Thanks for the tips, you will be missed. Enjoy prison.

 

[Digitalclips]

Two words ... "Firing Squad"

 

[DTphonehome]

I like how one of the prosecutor's names is "Antonia Apps"

 

[cargoplex]

So what kinda time are we talkin' here? Man, $22k for a phone call... but that still ain't worth prison!

 

[griz]

I like how one of the prosecutor's names is "Antonia Apps"

That's because as we all know, say it with me, "There's an app for that."

 

[0098386]

I like how one of the prosecutor's names is "Antonia Apps"

New mobile Google OS?

 

[3goldens]

Makes me laugh that the moronic corporate analysts would actually pay for something like this when better information just comes in just anonymously anyway.

And it will continue to happen, this won't deter anything, people do it just out of spite, and to have the satisfaction that they dropped a dime on Apple.

 

[thesmileman]

I find it interesting because these types of leaks are the sources of information that make this site profitable. It will be interesting to see people on this forums reaction to this news.

 

[Kaibelf]

So what kinda time are we talkin' here? Man, $22k for a phone call... but that still ain't worth prison!

I know a guy who was in the clink for something similar. I think he did 5-6 years. Wrecked his life, and rightfully so. Not to mention, these people are wide open to suits from shareholders also.

 

[TimTheEnchanter]

Here we go.... ala Wikileaks....

iLeaks
Appileaks
Macileaks
leaks

SJobs: Any chance we can nail them with rape charges?

 

[Jaro65]

I know a guy who was in the clink for something similar. I think he did 5-6 years. Wrecked his life, and rightfully so. Not to mention, these people are wide open to suits from shareholders also.

Indeed. They actually got paid very little considering the risk they took. After all, they were under NDA.

 

[powers74]

insider

You can get busted for saying K48.

 

[Ironduke]

Two words ... "Firing Squad"

Your joking right

 

[Westside guy]

So is Arn contributing to these folks' defense funds?

I find it interesting because these types of leaks are the sources of information that make this site profitable. It will be interesting to see people on this forums reaction to this news.

They violated an NDA. I have no sympathy for them. But unlike some, I don't care a huge amount for rumors - I'm more interested in the newsy stuff that comes through here.

 

[Diode]

Makes me laugh that the moronic corporate analysts would actually pay for something like this when better information just comes in just anonymously anyway.

And it will continue to happen, this won't deter anything, people do it just out of spite, and to have the satisfaction that they dropped a dime on Apple.

Where do you think "trusted" sources come from? Exactly from people like this....

 

[vincenz]

Geez, you'd think everyone was talking about government trade secrets and the security of the country.

 

[Gemütlichkeit]

So what kinda time are we talkin' here? Man, $22k for a phone call... but that still ain't worth prison!

intellectual property is still property, this guy basically stole from a huge company. Muggers around here go to jail for much less.

 

[andiwm2003]

thost two "bombshells" were not much more information that what could be guessed with 90% confidence by just looking where the technology goes. The iPad details where so vague that you got more info here on the board.

The sales figures for the iPhone are the more incriminating bits here.

 

[SockRolid]

Surprised it took so long

I'm hoping "analysts" will S the F U a little more about Apple and other companies' product roadmaps. How is their "analysis" different from industrial espionage?

"Analysts" claim that they're working for their clients, but they release their findings to the public after they tell their clients. Why? So if one of their random predictions comes true, magically, they will get more clients who pay for that information before it becomes public.

Sucker born every minute.

 

[RoboCop001]

I like how one of the prosecutor's names is "Antonia Apps"

I'd tap that app. Maybe.

 

[patch]

During this conversation, secretly taped by the FBI and now entered into evidence,

Wait... what?! The FBI is openly saying they were recording all this? Why is that not the headline...

 

[Richard1028]

Wait... what?! The FBI is openly saying they were recording all this? Why is that not the headline...

Huh? They had a warrant to do this.

 

[blahblah100]

intellectual property is still property, this guy basically stole from a huge company. Muggers around here go to jail for much less.

Non-violent crime is a lot different than violent crime and comparing them makes no sense.

But I agree, they stole property, whether intellectual or physical, and should be punished accordingly.

 

[Cresence]

$22K Is Nothing

Whilst in graduate school, I once heard a student ask a senior professor, "Can you be bribed?" Answer: "Yes, but you can't afford me."

It wasn't an MBA program. I guess the MBA's didn't learn too much about price elasticities and such for honesty, integrity, stuff like that. Pity. These bozos went for peanuts.They should be in prison as much for stupidity as dishonesty.