
Lawyer in Charge of Apple’s Insider-Trading Policy Accused of Insider Trading - pseudolus
https://www.bloomberg.com/news/articles/2019-02-13/ex-top-apple-lawyer-levoff-accused-by-sec-of-insider-trading
======
aresant
Greed is a wild thing!

Reading through the SEC complaint while he was a very senior executive, he was
a very amateur trader.

The risk-analysis in hindsight aka - why risk jail / fines / everything to
avoid a $350k loss on $10m+ of shares - is stupid.

But I'd say he clearly overestimated the risk / reward in a very amateur /
fear based way.

For instance in one session, he bought ~$1.1m of stock expecting a large pop,
and then sold a few days later for a net profit of only $4,500!

That should cover about an hour of his current legal bills.

Lots more detail in the actual complaint:

[https://www.sec.gov/litigation/complaints/2019/comp-
pr2019-1...](https://www.sec.gov/litigation/complaints/2019/comp-
pr2019-10.pdf)

Eg:

\- Oversaw their entire corporate law division of 30 - 50 - "Levoff was
responsible for Apple’s compliance with securities laws, including providing
legal advice in connection with Apple’s SEC filings and financial reporting .
. . "

\- Apple had a long standing "blackout" policy where insiders were cautioned
NOT to trade at all that he clearly ignored / broke multiple times. Including
after he sent the blackout notice updated with "the first sentence of Levoff’s
February 24, 2011 email stated: “REMEMBER, TRADING IS NOT PERMITTED, WHETHER
OR NOT IN AN OPEN TRADING WINDOW, IF YOU POSSESS OR HAVE ACCESS TO MATERIAL
INFORMATION THAT HAS NOT BEEN DISCLOSED PUBLICLY.”

~~~
pseudolus
It's not always greed, sometimes it's desperation and I don't say that with
any sympathy. When you're surrounded by wealthy people with wealthy spending
habits you, sometimes, tend to mirror their spending habits to your own
detriment. Unfortunately, "keeping up with the Joneses" is a real thing.

~~~
segmondy
Call it any thing you want it's greed. I can understand a developer with $100k
worth of stocks trading in desperation because they want to pay off their
student loan or buy a house. But this guy had around $10 million. What
desperation?

~~~
therealforsen
Someone who's not a developer with student loan debt might call that greed as
well. We are all very sympathetic to ourselves.

~~~
tw04
And yet there's been countless studies about the point at which money stops
being about comfort and it's ~$140k/year. At about $200k a year in most of the
country and I'll go so far as to say $500k/year in the valley, if you are
struggling with money you are being extremely stupid with it. At $10 million
you could instantly retire and lead an upper middle class lifestyle off the
interest alone in 90% of the country.

------
gnicholas
> _That month, he sold about $10 million of Apple stock -- virtually all of
> his holdings -- to avoid losing about $345,000, the SEC said._

Saving over $300k is sizable, but selling $10M in stock seems pretty risky.
Wouldn't this be a huge red flag, especially for someone who works at the
company? Seems to be lots of risk and not that much (comparatively) saved.

Or perhaps this was his strategy in flying under the radar, since it didn't
net him that much on a percentage basis?

But most importantly, if you have ten million dollars in AAPL (and a job that
pays you more besides) why on earth are you taking risks like this?

~~~
dsfyu404ed
Cops can get tunnel vision. If there's anyone capable of walking right up to
but not crossing the "insider trading line" it's going to be a lawyer that
specializes in insider trading. If there's anyone that's going to be arrested
as a false positive for insider trading it's going to be someone walking right
up to but not crossing the line.

I dunno if his lawyer is just very optimistic but “We look forward to
defending him with respect to these allegations,” is lawyer speak for "I have
a mountain of evidence that is going to make these people look like fools."

IMO whether he's insider trading or just barely not it's a stupid risk to take
either way.

Obviously this (and every other comment around here) are just speculation at
this point since we have no good details.

~~~
gnicholas
> _“We look forward to defending him with respect to these allegations,” is
> lawyer speak for "I have a mountain of evidence that is going to make these
> people look like fools."_

To me (a former lawyer), that vague statement is definitely not an indication
that he has a strong case. He may have one, but that statement comes across as
weak to me. It's what you say when you can't offer any specifics about why the
allegations are untrue. (As the old lawyer saying goes: "When the facts are on
your side, pound the facts. When the law is on your side, pound the law. And
when neither is on your side, pound the table.")

~~~
dsfyu404ed
I guess you could read it that way. Most of the time if you're the least bit
guilty then "no comment" is the lawyer's comment. Obviously this comment is
nothing of substance but it's certainly more upbeat than "no comment"

~~~
sjjshvuiajhz
I disagree, it’s extremely common for lawyers to make strong denials to the
press. Even if there’s nothing to back it up, it looks better from a PR
standpoint than a “no comment” which puts the lawyer in a slightly better
position when negotiating a settlement.

------
Bucephalus355
Lol remember in the mid-1990’s how self regulation of industry by industry was
going to change everything? Industry was going to regulate extremely
effectively because it understood all the “nuances” and save the government
the expense of having to do it. I guess it sort of did change things but for
the worse clearly.

------
RcouF1uZ4gsC
Why would Apple allow senior executives to do any AAPL stock sales outside of
a 10b5-1 plan? Why would a senior executive ever sell company stock outside a
10b5-1 plan? That just seems like asking for trouble. The safe thing to do
once you reach a certain level is to do all stock sales of company stock
through 10b5-1. Anything else is just stupidly opening yourself up to charges
of insider trading.

~~~
Gibbon1
I wonder if it's born of habit. People a lot lower down the corporate ladder
very often have access to insider information. Either directly or indirectly.
When those people trade on insider info it's hard to prove/not worth going
after.

------
anxman
Why is this only a civil SEC investigation? This should also have an FBI /
criminal component. Perhaps it is coming later like it did with Theranos and
Experian.

~~~
dctoedt
The WSJ article says there's a criminal complaint too, in New Jersey.
[https://www.wsj.com/articles/sec-accuses-ex-apple-
executive-...](https://www.wsj.com/articles/sec-accuses-ex-apple-executive-of-
insider-trading-11550081111)

~~~
anxman
I see a State level complaint. I'd like to see a Federal investigation also.

~~~
scott00
They are federal charges: "... according to the U.S. attorney’s office in
Newark, New Jersey, which filed criminal charges against Levoff".

~~~
anxman
Niceeee

------
jak92
He would have been better off just holding.

~~~
jiveturkey
reminds me of martha stewart

~~~
elliekelly
She would've been better off not lying to investigators. She went to prison
for obstruction of justice, not insider trading/securities fraud.

~~~
Gibbon1
I always got the feeling she didn't just lie, she pissed them off while doing
it.

My mother had to cover insider trading when she was teaching. She said a lot
of her students 'didn't get it'. My mother also worked for the IRS, tip don't
piss off the enforcement people.

------
yibg
Senior director at apple is considered a very senior executive? Isn’t the
director level the entry point for what would be considered an executive?

~~~
elliekelly
He was a senior director and corporate secretary. Corporate Secretary would be
the "very senior executive" function... though interestingly not senior enough
to be listed as an "executive officer" on Apple's proxy statements.

Since he wasn't an "executive officer" he wasn't required to file a Form 4
with the SEC.

------
jak92
He could have hedged with options. In such a liquid stock, probably less
likely to get noticed - although - even 10mm isn't much. Does the SEC review
insider trades?

~~~
throwawaymath
Most large tech companies actually forbid hedging their stock's equity
performance with corresponding options.

