U.S. Markets closed

Ex-Apple Lawyer Indicted on Insider Trading Charges

Chris Dolmetsch

(Bloomberg) -- Former Apple Inc. lawyer Gene Levoff was indicted for securities and wire fraud, more than eight months after he was charged with trading on non-public information.

Apple fired Levoff in September 2018 after placing him on leave two months earlier, according to a filing in a related lawsuit by the U.S. Securities and Exchange Commission. Over his decade-long career at Apple, he was one of the most senior executives, reporting directly to the general counsel.

Levoff, who served as Apple’s senior director of corporate law, is accused of repeatedly trading on information about revenue and earnings dating back to 2011. The illegal investments led to about $227,000 in profits, while allowing him to avoid $377,000 of losses, according to prosecutors in Newark, New Jersey.

In one example, detailed in the SEC’s case, Levoff learned that Apple wouldn’t meet analysts’ third-quarter forecast for iPhone sales in July 2015 and sold about $10 million of Apple stock, or almost all of his holdings, allowing him to avoid losing about $345,000 when the company’s shares plunged more than 4% after announcing its numbers.

“We look forward to vigorously defending Mr. Levoff with respect to these allegations,” his lawyer, Kevin Marino, said in an e-mail.

The allegations were a black eye for Apple, which said after Levoff was charged that it was reviewing policies implemented to prevent illicit share transactions. The company has had a mostly clean record on financial reporting issues since shareholders accused its co-founder and former Chief Executive Officer Steve Jobs of options backdating in the mid 2000s. A special board committee led by former U.S. Vice President Al Gore cleared Jobs of misconduct.

Levoff was responsible for making sure that employees complied with the company’s insider-trading policy, and implemented an update of the procedures in 2015, the SEC said in its suit. He even sent an email to workers -- in all capital letters -- in 2011 reminding them that they weren’t permitted to trade shares based on non-public information.

As a member of Apple’s “disclosure committee,” he had permission to review quarterly and annual reports, and press statements before they were released to the public. Prosecutors said he would read through internal documents he obtained as a member of that group and make trades in his personal brokerage account at TD Ameritrade.

(Updates with background.)

To contact the reporter on this story: Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Blumberg, Joe Schneider

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.