Fortune reports there are allegations of inside trading revolving around Apple's iPad release. The FBI secretly recorded an employee of one of Apple's suppliers telling a hedge fund investor about data regarding the sales of the iPhone, the next generation iPhone release and even the secretive iPad launch.
In court papers unsealed Dec. 15, the FBI recorded Walter Shimoon of Flextronics talking about project K48 on Oct 1, 2009.
Shimoon told the person on the other end of the line, "It's a very secretive program... it's called K48. That's the internal name. So, you can get, at Apple you can get fired for saying K48."
This was after Shimoon was busy telling the person about sales figures which hadn't been released yet. Because Apple is a publicly traded company, the complaint alleges this is insider trading.
Even worse, Business Insider has more of the transcript in which Shimoon says he's not even involved with it. Project K48 wasn't even on his desk and he was talking about because he heard something about some product. Shimoon even speculated it might have been a reader.
The Wall Street Journal says the K48 case is one of five examples the FBI is working on regarding insider trading. Other companies involved splurged secrets about Dell and their suppliers. Those arrested were on both ends of the spectrum as some company employees were allegedly offered cash in exchange for the information to investors.
Fund managers and investors at Primary Global LLC were arrested in the case as well as three men who supply larger computer companies. The FBI raided the offices of Primary Global and Diamondback in late November to gather evidence on the case.
The specific companies themselves have not been named in any legal action by the FBI but the case of K48 and other insider trading probes have put investors on notice. Attorney General Eric Holder responded to the November raids by saying the illegal activities are "very serious" and that the companies were fully cooperating with authorities.
One witness had already been arrested in the K48 case. Business Week reports Daniel Devore pleaded guilty to insider trading in string of 24 arrests and 15 guilty pleas going back to 2009 since the FBI has stepped up pressure on company insiders who tip off investors about data not yet released to the public.
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