As smartphone maker Apple Corp.’s stock was plummeting this morning, losing a staggering $75 billion in market cap, and dipping to $92 pershare, CNBC’s Jim Cramer stunned the TV audience by pulling a private email out of his inbox.
That email was from Apple CEO Tim Cook, which stated the following:
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.
Yet the email, while helpful to some viewers of the program, was not accompanied by the required public filing. This makes the disclosure a private business update with an outside party. Which means Cramer and any / all of his staffers could have had access to this email prior to its public disclosure and could have potentially traded on the information.
This almost certainly makes the gaffe a violation of the SEC’s Regulation Fair Disclosure, which mandates that all publicly traded companies must disclose material information to all investors at the same time.
The SEC has yet to respond to the numerous calls for it to investigate but we suspect it won’t be long before they take a look. Other tech companies, notably Netflix, have fallen afoul of this rule under similar circumstances in the past.