With global stock markets crashing in sequence after the open on Aug. 24 in Asia, and traversing over into Europe and the United States, an interesting, and potentially illegal piece of information may have saved a complete collapse in equities during Monday morning trading. As the Dow, Nasdaq, and S&P 500 were in free fall of over six percent, a sudden piece of news was ‘given’ to CNBC’s Jim Cramer by the CEO of Apple that had not been disclosed to the public prior to this.
According to Cramer, Apple’s CEO Tim Cook emailed him with news on how Apple’s growth and iPhone activations in China were progressing, and that it was expected to be a boon for the company this quarter. This type of information given to someone who actively plays the stock markets, albeit through a charitable foundation, without disclosure to the rest of the trading world can be considered insider information, especially if it were used by Cramer or by Tim Cook to profit in some capacity on an unfair playing field.
As you know, we don’t give mid-quarter updates and we rarely comment on moves in Apple stock. But I know your question is on the minds of many investors.
I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through July and August. Growth in iPhone activations has actually accelerated over the past few weeks, and we have had the best performance of the year for the App Store in China during the last 2 weeks.
Obviously I can’t predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe that China represents an unprecedented opportunity over the long term as LTE penetration is very low and most importantly the growth of the middle class over the next several years will be huge.
Tim – Zerohedge
As of this moment there is no reason to believe that Jim Cramer used this information for personal gain, however, its disclosure on CNBC during a time when the markets were experiencing an extraordinary downturn has had an immediate and adverse effect on the direction of the equity markets. After having been down over 1000 points at the open, once this information was disclosed the markets have now recovered over 850 points, and rest at 130 points down just two hours later.
Over the past six months there has been an large outcry of how important and consequential information has either been leaked, or given to to individuals and institutions minutes before it was to be announced to the general public. In fact, just last week Bloomberg ‘accidentally’ released the Fed’s FMOC minutes which allowed certain HFT algorithms and other investors to front run the news, and profit from having the information minutes or seconds before anyone else did.
Information, and its timeliness to the markets, is one of the most powerful forces in the trading of stocks and other assets. And in a world where machines and computer programs can execute billions of trades in nanoseconds, the release of information to a select few can have devastating effects to both the market, and to those wanting to trade against the herd. And with today’s email by Tim Cook on Apple’s projected sales for the next quarter being given to Jim Cramer long before it was released to everyone else, makes the transaction not only highly suspect, but potentially illegal in the scope of several parties involved.