The lawsuit said Levoff “violated the duty of trust and confidence he owed Apple and its shareholders” in two respects: “First, as head of the Corporate Law group at Apple, Levoff was responsible for ensuring compliance with the company’s insider trading policy and determining the criteria for those employees (including himself) restricted from trading around quarterly earnings announcements. At the same time, as a member of Apple’s Disclosure Committee, Levoff received material nonpublic information about Apple’s financial results.”
“After being contacted by authorities last summer we conducted a thorough investigation with the help of outside legal experts, which resulted in termination,” Apple told Business Insider in a statement.
The charges facing Levoff
The SEC’s lawsuit alleges Levoff traded on insider information on at least three occasions in 2015 and 2016, including in July 2015, when he “received material nonpublic financial data that showed Apple would miss analysts’ third quarter estimates for iPhone unit sales.”
It said Levoff profited and avoided losses of about $382,000 through illegal insider trading in 2015 and 2016.
Levoff is also accused of engaging in insider trading on three occasions in 2011 and 2012 that resulted in him making about $245,000 in profit.
Levoff, who was fired in September, was Apple’s director of corporate law from 2008 to 2013, when he was named senior director of corporate law. He also served on Apple’s Disclosure Committee from September 2008 to July 2018.
The lawsuit alleges that given Levoff’s role at Apple, which included providing legal advice on securities law and “devising, implementing and enforcing” Apple’s insider-trading policy, he either “knew or was reckless in not knowing” that the earnings materials and filings were material and nonpublic.
The lawsuit cited one example of Levoff’s role in enforcing such policies, detailing an email Levoff sent Apple employees on February 24, 2011, to notify them that a blackout period would begin on March 1.
“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,” the first sentence of the email said, according to the complaint.
The lawsuit also said Levoff sent two such emails to employees “immediately prior to” engaging in insider trading in 2011.
Here’s the full document: