Marketwatch:
Apple Inc. CEO Tim Cook’s decision to give a rare midquarter update on the company’s performance in a private email to CNBC’s Jim Cramer on Monday may have violated federal disclosure rules, lawyers said Monday.
“Obviously I can’t predict the future, but our performance so far this quarter is reassuring,” Cook wrote.
However, the private disclosure, which was tweeted by CNBC reporter Carl Quintanilla and read on air at CNBC, may have violated the Securities and Exchange Commission’s fair-disclosure regulation, white-collar lawyers told MarketWatch. The rule, deemed murky and often contested by companies, addresses how publicly traded companies disclose material nonpublic information to certain individuals or entities.
When I first heard of this email, I thought this might happen. I’m sure Cook’s intentions were pure but this is something the SEC will at least have a little chat with him about but will likely result in little more than a “Bad CEO! No cookie for you!” warning.
If it were any other company, I’d agree with you. Given that it’s Apple, there will be 17 lawsuits, possibly including one by the government (funded by Amazon, of course).
Depends on the nature of the email. If it was intended for public consumption all along, then it may be considered the same as a televised interview. However if Cramer holds any Apple stock, things get a bit more troublesome. And if Cramer did any trading in Apple stock between receipt and public disclosure of the e-mail, then all bets are off.
Tim Cook has been around a long time. Even with Jobs as CEO, he often addressed questions from reporters and analysts after release of quarterly reports. He couldn’t possibly not know what he was doing was wrong. Can it be that Cook is getting a bit carried away with his openness approach?
My thought at the time was that Tim would likely not send out an email like that unless and until Legal had cleared it. If they did, if the lawyers were ok with it, I wouldn’t expect Apple to do anything other than stand their ground. (If SEC complains.)
I imagine Apple expected the email to be shared. (I mean it’s an email to Jim Cramer.) I don’t know if that’s a factor or not.
Pretty clear this email was intended to be public and was used as a way to get this out in a public way. Does anyone really think Cook was trying to give insider information to Kramer, for him to use to benefit his stock holdings? As far as I can see, Cook has an obligation to the stockholders to dispel wild speculation and fear mongering, the real manipulation of the stock. Cook basically did nothing other than reassure investors that the reality is that things are positive and look to remain so for some time. The true moral hazard would be if Cook disclosed secret negative information to Kramer. There is going to be nothing to this FUD, and no legal ramifications for Apple or Cook.
But the SEC can (and will) argue that there are better, more efficient ways to get that information out than to send it to one journalist (who also happens to be a stock market investor).
We don’t as yet know what the SEC will do, and if they see it that way then yes, you would be correct they might have some queries for Mr. Cook. As a journalist yourself, Apple stock holder or not, if you write a article about Apple and Mr. Cook responds by email, and you publish that response, there is no violation that I can see. It is both transparent and not at all unusual. Not sure efficiency is an issue here.
Exactly. I came here specifically to leave a rare post to say just that. There is only one thing the government loves more than investigating Apple and that’s to nail them for something, even fabricated if necessary when it’s been too long and especially if prodded by Bezos.
Somewhere in South Korea there is a long oblong table with many lawyers huddled around wringing their hands with macabre smiles wondering….
What can we do with this information?
You mean the Bezos who sold a million shares of AMZN a few weeks back, just after posting “surprise earnings”?
In punishment for talking to Jim Cramer…