The United States Securities and Exchanges Commission is examining whether information gained through sources within Apple’s supply chain constitutes insider trading.
According to The Wall Street Journal, a growing number of analysts have turned to gathering information from sources from Apple’s supply chain partners, including companies such as Foxconn.
The practice is referred to by analysts as a “channel check” and has led to crucial information emerging about the company, for example, its recent attempts to shift key parts supply contracts away from its competitor, Samsung.
However, the SEC is now investigating whether analyst firms engaging staff as “supply chain consultants” could constitute a form of insider trading.
“Insider trading basically comes down to where you know or ought to know that the person from whom you’re getting this information has a duty to someone else to keep it confidential,” former Securities and Exchange Commissioner Paul Atkins told the WSJ.
“If you go in and pay the mail clerk to give you special information, that’s not proper.”