Apple Inc (NASDAQ:AAPL)'s former corporate law director Gene Levoff has pleaded guilty to insider trading, despite being responsible for the company’s insider trading policy.
Levoff enforced Apple’s policy in his respective roles as corporate law director, assistant secretary, corporate secretary and co-chair of its disclosure committee.
Yesterday, the California resident pleaded guilty to six counts of securities fraud in front of US district judge William Martini over videoconference for an insider trading scheme that lasted for five years, the Department of Justice said.
“Gene Levoff betrayed the trust of one of the world’s largest tech companies for his own financial gain,” US Attorney Vikkas Khanna said in a statement.
“Despite being responsible for enforcing Apple’s own ban on insider trading, Levoff used his position of trust to commit insider trading in order to line his own pockets. This Office will continue to prioritize securities fraud prosecutions.”
Levoff stands accused of misappropriating non-public information about Apple’s financial results and carrying out stock trades based on that information.
In his role as co-chairman of Apple’s disclosure committee, he reviewed the company’s draft quarterly and yearly earnings statements and so had access to profit information before the wider market.
Levoff used this information to influence his decision on whether to buy and sell Apple stock ahead of its announcements and sold shares in the company around the time the results were released.
By buying large quantities of shares before the company was about to post strong profit or revenue results, he was able to later sell them for a profit once the earnings were made public.
He simultaneously sold off Apple stock when earnings were lower than expected to avoid major losses.
The Department of Justice said he made approximately US$227,000 of profit from such trades and avoided losses of up to US$377,000, based on documents filed in court.
Levoff was initially charged following a complaint brought by the US Securities and Exchange Commission in February 2019 and investigated by the FBI after allegedly “gaming the system” and exploiting his position within Apple for financial gain.
He was restricted by rules that prohibited him from trading Apple shares until a certain time had passed after any company disclosure but allegedly ignored these ‘blackout period’ restrictions.
Allegedly, he not only traded during blackout periods but simultaneously notified staff that they were prohibited from trading Apple stock at those times.
Levoff will be sentenced on 10 November. Each indictment carries with it a potential US$5 million fine and a maximum penalty of 20 years in prison.
Apple's shares were down 1.7% yesterday.