Insider Trading Ring Accused of Leaking Early iPad Information

One of the technology executives arrested Thursday in an insider trading sweep allegedly leaked advanced information about Apple’s iPad and revamped iPhone.

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Walter Shimoon, an employee of contract electronics manufacturer Flextronics International —a key Apple supplier—is accused of supplying confidential information about Apple’s new products to a tech sector analyst identified only as “CW-2.”

The criminal complaint in the case reveals that Apple and Flextronics referred to the iPad by the code-name “K48” in 2009. In October of 2009, Shimoon and CW-2 held a phone conversation that was recorded in which Shimoon allegedly revealed, among other things, that Apple was working on a new project under the code name K48.

“They [Apple] have a code name for something new,” Shimoon is quoted as saying. “It’s, it’s totally…it’s a new category altogether. And, uh, I speculated, it doesn’t have a camera in it, what I figured out. So, I speculated that it’s probably a reader. Something like that. Uh, let me tell you it’s a very secretive program but I’m not involved. So, uh, you know, I don’t really care…Yeah, I believe it’s called K, K48. That the internal name….So, you can get, at Apple you can get fired for saying K48….outside of a, you know, outside of a meeting that doesn’t have K48 people in it. That’s how crazy they are about it.”

The iPad was officially announced in January of 2010.

Shimoon is also accused of supplying sales information on the iPhone with the analyst. He also is accused of telling the analyst that the new iPhone would have two cameras. The iPhone 4G, which has cameras on both sides of the device, was announced in June 2010.

Interestingly, the complaint only characterizes the iPhone leaks as illicit inside information. The leak about k48 is not identified as “inside information” by the FBI agent who swore out the complaint. It may be that the information was deemed to vague—or flat out wrong—to be included as illegal inside information.


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