Tim Cook Email May Have Violated SEC Regulation
Following a query from CNBC Mad Money host Jim Cramer, Cook in turn wrote an email addressing Apple’s performance in China.
“As you know, we don’t give mid-quarter updates and we rarely comment on moves in Apple stock,” CNBC reported Cook as writing. “But I know your question is on the minds of many investors.
“I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through July and August.
“Growth in iPhone activations has actually accelerated over the past few weeks, and we have had the best performance of the year for the App Store in China during the last 2 weeks.
“Obviously I can’t predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe that China represents an unprecedented opportunity over the long term as LTE penetration is very low and most importantly the growth of the middle class over the next several years will be huge.”
However, questions have been raised as to whether the email may be in violation of Securities and Exchange Commission regulation. As reported by MarketWatch, some lawyers have questioned whether the email may have violated the SEC’s fair disclosure regulation, addressing how publicly traded companies disclose material non-public information to certain individuals or entities.
“The SEC will undoubtedly want to take a look at this,” MarketWatch reported Thomas Gorman, a partner at law firm Dorsey & Whitney, as stating, with Gorman adding that, at the very least, the SEC will contact Apple to seek context for the disclosure.
Lawyer Bill Singer, owner of the BrokeAndBroker blog, also told MarketWatch that the SEC will likely look into Cook’s email.
“I certainly could see, in some circumstances, where the SEC would want to review the conduct and think it is a violation of Reg FD,” MarketWatch reported Singer as stating.
“It constitutes a disclosure giving certain individuals the benefit before it was percolated by the rest of the public, during a fast-moving, extraordinary market.”