An in-house lawyer who for many years was responsible for overseeing the Apple Inc insider trading policy has admitted to using privileged financial information for illegal personal gain. The lawyer, a former director of corporate law across the company’s global operations, has pleaded guilty in a United States federal court to six counts of securities fraud over a five year period.
According to the complaint, the lawyer deceived one of the world’s largest tech companies for his own financial advantage. By misappropriating draft regulatory filings for his own use and transacting Apple stock held in personal brokerage accounts, he was able to make over $227,000 in profits and avoid $377,000 of losses, for a total illegal benefit of $604,000.
As former co-chairman of Apple’s disclosure committee, the lawyer was permitted to review the company’s confidential financial statements before they were submitted to the Securities and Exchange Commission (SEC) for approval. Even after telling other employees that trading within a designated blackout period was strictly prohibited, it is alleged he did so himself on several occasions.
In defence, the lawyer claimed the charges were unconstitutional, and that no legislation specified that insider trading was illegal. This argument, dubbed a ”Hail Mary” by prosecutors, was promptly quashed by the court. Sentencing is due to take place later this year, with each charge carrying a maximum penalty of 20 years in prison and a fine of between $250,000 and $5 million.
As a graduate of Stanford Law School, the lawyer joined Apple at the time of the iPhone’s release, rising to become a senior legal advisor reporting directly to general counsel. Despite this relative success, it appears he was unable to resist the temptation of trading on inside knowledge to improperly advance his Apple shareholding, estimated to be valued at $10 million.