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Fake E-Mail Results in Angry Apple Shareholders
drhamad writes "Apple stock dropped 2.2% today in mid-afternoon trading as Engadget published news based on a faked e-mail inside Apple. 'Apparently an internal memo was sent to several Apple employees--and forwarded to Engadget--around 9am CT today saying that Apple issued a press release with the news that the iPhone was now scheduled for October, and Leopard was delayed until January. About an hour and a half after that e-mail went out, a second e-mail was sent--this time officially from Apple--saying the first e-mail was a fake, and that the delivery schedule for the iPhone and Leopard had not changed.'"
Wheeee, fun time trading for somebody today.
The spammers have hacked Apple!
Stop! Dremel time!
Who else thinks they're running behind and wanted to see if they could push back the releases without scaring the sheep?
The Farewell Tour II
...is the fact that this hasn't happened more often.
Well, I guess that when you come to expect that a company's news comes primarily from intentional and unintentional leaks due to their own secrecy, it makes sense that people would buy this. Maybe it's time Apple re-thinks their super-secret policies.
I don't respond to AC's.
When something like this happens where a direct financial impact can be measured, do any of the rules change regarding the protections that the reporting website operate under?
If the New York Times reports that Microsoft was filing bankruptcy and the stock plummeted, The NYT would be held to some sort of standard. Sometimes a retraction isn't enough, for instance, to protect from a lawsuit.
Now when it's a website, do any of the protections exist, and what are the implications for these guys in terms of liability?
Somebody is going to jail as soon as they look to see who sold Apple short.
Probably some 12 year old kid in Nebraska.
these things are tracked as I recall.
Looks like they are flushing out folks who forward internal emails. Send to a few people and see if the fake news gets out. Binary search in action!
I remember reading somewhere that sending out false information was common practice inside Apple. They send out false information to a small group of people, if it leaks they have a good idea of who leaked it.
I think an 'owned' tag would be appropriate. =)
It must have been something you assimilated. . . .
I'm a fan of Apple products and am about to buy one, but can't resist pointing out that whoever did this is engaged in very tiny-scale fraud compared to what Steve Jobs and the rest of upper management have already admitted doing.
They have admitted:
* Inventing on paper a fake Board of Directors Committee meeting that never took place (source)
* Using this fake meeting to backdate options at a total benefit to Jobs of $20 million (contrary to Jobs' false spin) (same source)
* Backdating a total of 6,400 stock options grants over five years, including two to Jobs (source)
Those facts are agreed by all parties. All that's being fought about now is WHICH senior executives and board members were at fault. Since obviously Jobs rules Apple so loosely that this kind of thing can go on under his nose (cough) and just HAPPENS to have also happened at Pixar.
The crazy part is that backdating itself is totally legally, and doesn't even affect how you accont for the options, as the New Yorker has pointed out in an excellent short essay. You just have to disclose what you did, and that, it seems, threatens the pride of a lot of Silicon Valley execs who like to pretend that stock options are a performance motivator (when in the case of backdated options they are not).
Anyway, so some guy breeched Apple security and sent out a fake email, and probably made some cash on the stock dip. He'll probably be hunted down and prosecuted and do some time, which is kind of sad, considering far more money has been fraudulently obtained by some of the top people at Apple (again, that is not in dispute) and top people at tech companies all over the Valley.
Not going to keep me from buying a Mac, but sad nevertheless.
"Is this an accurate report?" isn't a "dumb" question. It's more of an obvious, first-thing-anyone-with-half-a-brain-would-ask sort of question. Heaven forbid anyone ever waste time and resources, lose money, or even get killed because some idiot was too lazy, stupid, or uninformed to bother fact-checking (or was aware of the facts and disregarded them). Oh wait...all that stuff that happened over the course of history up to this point...yeah...hmm...
People having knee-jerk reactions to news before (or without ever) checking it's accuracy is NOT limited to the stock market my friend...
The person who made the false statement could get in trouble under securities law, specifically something called Rule 10b-5, which states that "It shall be unlawful for any person . . . by the use of any means or instrumentality of interstate commerce . . . . To make any untrue statement of a material fact in connection with the purchase or sale of any security."
However, liability under 10b-5 requires scienter, or a intent to deceive, manipulate, or defraud. It's possible the person who wrote the fake email had an intent to decieve, but seems unlikely that engadget did.
because i heard the same story about delaying the iphone till october from a cingular rep two weeks ago. i wonder if this is the same leak...
What does the Securities Exchange Commission have to say about all of this? It would be interesting to know who has recently shorted a tonne of Apple Stock - as they would have the most to gain from a temporary smear campaign.
---
This doesn't smear
Ace
Don't believe what you read on the internets.
Nice troll. But wrong on all counts.
MABASPLOOM!
fraudulent (frô'j-lnt) pronunciation
adj.
1. Engaging in fraud; deceitful.
Was the meeting real? Were the dates on the options correct?
First, they claim that Linux infringes on more than 250 of their software patents. They have been backpedaling since then but are pretty consistent in alleging that Linux infringes on their IP somehow. They are also implying that Open Source is a risk due to the lack of a backing corporation or warranty (Uh, have they read their own Windows EULA lately?).
Now, a faked memo is released stating that Apple's important releases this year are delayed, which strongly implies to PHBs that the products are flawed.
I can't help but think that Microsoft is behind this in their desperation to maintain market dominance.
The Christian Right is Neither (Christian nor right). See: Matthew 23, Matthew 25, Ezekiel 16:48-50
Maybe the "B. Gates" signature should have been a clue.
The nature of a "good" investor to react to news the fastest. In most cases, especially when it comes to short-term earnings, the mob mentality is the wave you want to ride, incidentally the mob mentality is a result of everyone trying to ride the wave that they caused and are a part of. Seeing how that's the case, it doesn't surprise me one bit how this scenario happened.
Of course the smart investor was sitting in the corner buying off the stocks that the doubters were selling, making him an easy 2% premium. Makes me wonder if it could have been intentional with the perpetrators hoping to make a few bucks off of rumors.
The only consistency in life is the lack thereof
All that imaginary money and what-not... Silly, silly stock system.
"He who can destroy a thing, controls a thing." --Paul Atreides, Dune
It was the unmistakable sound of someone's large meaty ass smacking the pavement outside Apple HQ in Santa Clara. Anyone got a web-cam of the in-flight trajectory? YouTube demands it.
1) snoop on email and phone lines without warrants
2) temper with it
2) profit!
Seriously, this episode shows how sensitive and precious internal company information is and how dangerous it can be, when it is tempered with. In this particular case, snooping was probably not the reason for the damage, but the story illustrates how spying on citizens could damage enterprises in the future.
Whenever I get emails like that, I check that company website's Press Release section... if it's not there, I don't react on it (it's just a rumor until their PR department confirms it) :)
I BET Steve Jobs faked that email himself since he can no longer back-date his stock options. By bringing the price down, he can buy more options and sell them when this "fake email" is confirmed to be a hoax..then sell and roll in the dough like a greedy piggy that he is.
Of course, someone could have hacked the website as well AND sent the email
Wait a sec - was the first one fake but actually sent within Apple (and then on to Engadget)?
Or was the whole thing fabricated - someone outside Apple made the whole thing up and sent it to Engadget?
Hope he/she liked their job!
iPod sales have continued to drift down for the last few quarters. And the Mac marketshare is roughly the same as when Jobs took over years ago.
Don't know, don't care about the overpriced iPhone.
Perhaps, or maybe it's Apple's way of finding out who's been breaking their NDA.
Yeah, and I'd bet the Board of Directors would have liked a chance to vet that kind of move before blowing away $2 billion in shareholder value. I think this is just a prank gone horribly wrong. But for the grace of common sense go I.
Luke, help me take this mask off
Everyone is jumping all over Apple for their "secrecy" when it clearly has nothing to do with these kinds of episodes which happen at all kinds of companies, not just the clever secretive ones.
Others are guessing about which Apple employee will get fired, when all reports indicate an outsider as the source, not a real Apple employee. As consumers of news therefore, it seems that the majority of us have failed to even discern the basic facts here.
As producers of news, the kiddies at Engadget are the real culprits here and the creators of the whole mess by means of their thoughtless and incompetent "journalism."
They are the ones that did not bother to simply phone up Apple and ask for a confirmation as any decent journalist would normally do. They are the ones that continued to run the false story on the main page even after they received a correction from Apple itself (they put that *after* the break for about an hour after they found out and did not change their headline). They are the ones that filled up their own comments area, calling the people protesting their move "jerks" and telling them to "shut up." They are the ones that deleted posts on their site that were too critical of their actions.
The problem is simply one of a lack of journalistic standards and a blurring of the line between "I'm a rich kid who likes computers and has a website" and "I am an IT reporter." Incompetence and asshattery plain and simple.
#1 Fake email from Apple executives that product will be delayed.
#2 When the panic happens buy Apple stock at a low price.
#3 After Apple figures out the email was a hoax, sends out new email saying the schedule has not changed. Apple stock returns to normal.
#4 Sell Apple stock and reap in big profits.
I'll be the fake email was sent via some Botnet that a Uber Hacker group had controlled to pull off a daytrading scam.
Remember, Slashdot does not have a -1 disagree moderation, and no, troll, flamebait, and overrated are not substitutes.
The fact that Apple has given in to preannouncing some products lately (Leopard, AppleTV, iPhone) shows that they have given ground on their previously super-secret ways.
Fact: Leopard is just the next version of a product that everyone already knows about. They've always hyped their OS because that's what software makers do, and how they generate buzz and interest. Plus, you can't keep an OS secret because you have to get people to generate software for the OS. That's why you have beta periods, developer networks, and the like to make sure that as many developers who want their products compatible with the next version are ready the day of the official release. Sun, Microsoft, IBM, all do it/did it. It would hurt Apple too much not to.
Fact: AppleTV had about the same lead time as versions of the iPod and other hardware announcements from Apple. No hardware maker makes their product available right this second after it's announced. They announce it at the best time possible to generate buzz, and then gear up to ship. It helps stir speculation and anticipation. Apple TV was no exception.
Fact: As Jobs said, he had to submit the iPhone to the FCC for approval. Jobs only announced it this early because at this point, he couldn't keep it under wraps any longer. It becomes public record once the phone is submitted to the FCC. Therefore, you announce it to keep the thunder away from everyone else.
"All great wisdom is contained in .signature files"
All confdential documents at Apple are marked 'Apple confidential'. Any manager doing this only needs to preserve the 'Apple confidential' header/footer, and (s)he is absolved of responsibility. Responsibility rests solely on the shoulders of the employee(s) leaking the document, it's drummed into every employee when they join.
Apple could quite legitimately point to that lawsuit-failure as evidence that the law is requiring more action on Apple's part to identify leakers internally. If this does in fact lead to someone getting fired for leaking, they could feel quite pleased with themselves. It's not as though asking an employee "did you leak this to the press" is ever going to work, is it ?
No, the rules do not change. And the rules are "there are no rules". They have zero liability here. In good faith, they thought the story was true.
/. debate the details of the story, several hedge funds trade out of Yahoo at a very nice profit.
Unless it is shown that a hedge fund or some other entity both made-up and profited from the story, it is what it is. A fake story and nothing more. Yes, the credibility of Engadget will be hurt but there isn't any legal implication whatsoever unless it was a true stock scam.
If you are actually dumb enough to trade on information like this, then you deserve what you get. "Bad" information is everywhere. That's why the smarter ones of us don't take everything we hear as the final word. As an example, don't you ever wonder how the "Microsoft is buying Yahoo" story got started? It's much much more subtle than this story and THAT is the proper way to do a stock scam. In that case, nobody can point to the originator of the story and it just seems plausible enough to actually be true. Meanwhile, as we idiots on
Of course, nobody can prove the story is a pump and dump so nothing happens and the world goes on. However, I don't think the Apple/Engadget deal is the same thing.
the mail was from sballmer@apple.com
care to prove AC wrong with some data?
While it is debatable as to whether Apple is too secretive for its own good, there is no denying that the company utilises rumour to build hype for its products through news blogs such appleinsider and thinksecret. The thing is about a rumour (that some people may forget) is that it can be both positive and negative for the subject in question. Sometimes rumours can backfire and this is just purely an instance of the Apple rumour mill NOT working in the company's favour.
As a former Apple employee, I can tell you without a doubt that they don't distribute this type of information in memos. The grunts like us are not privy to release dates for anything except pretty much our own assigned products. The only people who are at any point aware of big-picture information like this are the suits, and I doubt any of them would leak (especially considering you can count them on two hands).
Like the iPhone, Apple employees rely on the same sources regular joes do to find out about new releases. Nobody besides the iPhone team even knew what an iPhone looked like before it was shown at MacWorld.
Comment removed based on user account deletion
Tom Clancy details a variation on this in one of his books: if you suspect you have a leak, you draw up a document which is a mix of truth and plausible lies which is interesting, will largely congeal with what the mole's handlers already know, and includes lurid phrasing at several locations. Then you leak N copies of that memo to your N possible leaks, and listen for what combinations of key phrases (or, not quite as easily, key facts) make it into unapproved channels. For example, you might embed twenty-five key phrases in a document about (hypothetical) insurgent activity in Iraq, and then if the New York Times quotes a briefing as saying that "Baghdad will be covered in rivers of blood" (given to 4 suspects) and that the military fears "total strategic defeat not just in Iraq but elsewhere" (given to 8 suspects) then the intersection of the two sets identifies the leak.
http://en.wikipedia.org/wiki/Canary_trap
Help poke pirates in the eyepatch, arr.
Ok, forgive me here, but it seems there is a lot of discussion on how someone pulled this hoax off.
I have a better conclusion? What if this is just apple trying to see who their leaks are?
They give a slightly differently worded memo to different suspected employees, whatever copy leaks out shows who the snitch is. Then they say the first memo was a fake, and fire/punish the employee who leaked.
Win win for apple.
You never realize how much manually made unmanaged "linked" lists suck, till you have src.link.link.link.link...
Can we please reduce Apple cult lemmings' posts? Look, my first computer was Apple ][ Plus (Applesoft Basic and 6502 assembly), but this new generation of Apple devotees are unbearble. I'd rather read MS shills' posts instead.
They wouldn't do this in the cash markets and they certainly wouldn't go long Apples shares as you're describing.
No, if this was manipulation (and I agree with you on the point that it probably was), then someone purchased put options, which increase in value as the underlying security, Apple shares in this case, decline.
They'd select the precise contracts to purchase based upon expiration dates and how far out of the money the put options were. Options give the holder immense leverage; I've controlled $3.4 million in shares using only about $20K in capital.
Short selling Apples shares wouldn't be viable as you're back in the cash market again - no leverage.
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It was Le Chiffre!
The great interest of this is that it shows how much the current share price reflects expectations of the performance of the iPhone. It was a great dry run. Those who believe the price has built into it unrealistic expectations of the iPhone can now confidently make a wager using options, and pretty much know for sure that if the thing doesn't take off like a rocket, they are going to clean up.
Expect put option sales to rise gradually over the next week or so.
The problem goes a bit further, unfortunately, than tech news. Much the same servility in the higher reaches of the press explains why "weapons of mass destruction" that don't exist become the basis for a war; in that case, infamously, the faked press releases were from Washington and its allies, and the chief regurgitator was the New York Times.
It wouldn't be a bad thing to ask why we have become such a bunch of suckers in the U.S.
So, Engadget runs a fake e-mail. Would it have occurred to them to wait and call Apple to see if it's true first?
Gosh, that Steve Jobs is such an ogre about the Journamelists who cover Apple. Control freak!
Or maybe we see why.
My brother used to work for UPS back in high school, and they would regularly do theft audits. One of the best techniques was to simply open a bag of M&Ms at the start of the sorting line, and can anyone who ate some as the goodies made their way down the line. Similarly with other small, easily grabbed items that employees damnwell better have known better about.
Despite iron-clad policies, stories of this happening in the past, and giant signs on the wall, they snagged folks all the time.
In this case, leak a memo internally that is SO tasty that it would get past someone's better senses. Then just follow the path of destruction.
"Learning is not compulsory... neither is survival."
--Dr.W.Edwards Deming
Two emails, one with bad news that will hurt Apple's stock price, one with happy news that will sustain Apple's stock price. Both from Apple themselves. One is true, one is spin. All I know is that Apple CONSTANTLY misses their deadlines, and then underdelivers on things they've implied (they're careful not to promise things outright, but they definitely don't correct the positive assumptions we make when we hear things like "Jaguar is the FASTEST operating system" or "the world's FIRST 64-bit computer" or "AppleTV allows you to watch ALL your video blah blah" when the reality is that Jaguar was bloated, the G5 was not the world's first 64-bit computer and AppleTV is shit and has DRM lockin up the ass and terrible video quality.
I am a PowerBook owner who is tired of Apple lying constantly and getting away with it -- I am now dumping the mac onto the missus and switching to Ubuntu on HP hardware -- and loving it. It's the system OS X should have been. I now view my "switcher" thing as a foolish college-era "experimentation"; at least I didn't experiment with homosexuality.
Apple's entitled to their secrecy. Endgadget has no obligation to Apple, and if they receive what looks like a scoop they will naturally act on it as soon as possible. They were within their rights.
If you invested in a stock you believe in and kept your money there, a single email on some pimple-faced teenager's blog about a delayed product or even the 2% dip in stock price that follows for a few hours wouldn't matter to you at all.
Whatever happened to fact checking? The journalistic process? When did emails become newsworthy?! For god's sake people, wake up!
Thrilled to know they have enough traffic (and aggregators checking them) to make such a stink. I bet they increase their ad sales revenue based on that alone.
No sig for you! Come back one year!
I wonder what 2.2% of the stock value costs...
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
... which one of the statements can be trusted more, the so-called fake or the official one?
okay, so you equate an email as news? I bet you believe everything you read about Paris Hilton too. ;)
Impossible to realise these two:
... ...
1. The delivery date better not change now
2. The products better be fit for use
Better get rid of these share before people find out.
I worked in some mobile phone software/platform company .I thought Apple is not very dear,but SONY that i can not accept.
Apple TV Converter
http://www.apple-tv-converter.net/