A massive insider trading probe focused on expert networks illustrates just how valuable Apple's secrets---product roadmaps, new features and forecasts---have become.
On Thursday, the Feds arrested four people in an insider trading probe. According to the FBI, the U.S. government alleges that James Fleishman, an executive at Primary Global Research, used four consultants employed by public companies to deliver confidential information. The companies were AMD, Flextronics, Dell and TSMC. (the FBI complaint)The Holy Grail for traders looking to game the system, however, were details about Apple's plans via Flextronics, a contract equipment manufacturer. A Flextronics employee, Walter Shimoon, had the goods on Apple trade secrets through a contract manufacturing relationship. Flextronics supplied camera modules to Apple.
As part of this business relationship, Flextronics and certain Flextronics employees were provided with information and forecasts regarding Apple purchase or shipping orders regarding certain Flextronics components, as well as information regarding alternative suppliers for Apple products. The confidentiality of this kind of information was governed by non-disclosure agreements executed between Flextronics and Apple. In addition, Apple often shared information with Flextronics about future Apple products under development. The confidentiality of this information was governed by a separate non-disclosure agreement executed between Flextronics and Apple. For example, in or about 2009, Apple informed Flextronics about a highly secretive project being developed that ultimately resulted in the public product launch of the "iPad" tablet computer.
Shimoon had a confidentiality agreement in place, but had a series of calls with Primary Global Research between January 2008 and June 2008 detailing the upcoming iPhone and sales forecasts. The real rub is that Shimoon only got paid $22,000 in consulting fees.