Fake E-Mail Results in Angry Apple Shareholders 193
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.'"
And when do options expire this month? :-) (Score:5, Funny)
Re:And when do options expire this month? :-) (Score:5, Insightful)
Re:And when do options expire this month? :-) (Score:5, Funny)
It will look like a perfectly normal transaction: we invested the money that we got from our grandmother's estate.
Pity about grandma...she screamed awful loud.
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*Then throws chair at picture of Steve Jobs*
Re:And when do options expire this month? :-) (Score:4, Funny)
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Re:And when do options expire this month? :-) (Score:5, Funny)
- Send out fake email which will result in a good price drop
- Buy stock!
- Send out official email which denies everything
- Stock bounces back up within 1-2 days
- Sell stock!
They'll never catch me!Re: (Score:2)
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These days, what's the real difference?
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Re:And when do options expire this month? :-) (Score:5, Insightful)
Not to mention that this Friday is the monthly expiration day for traded options. The big brokerages that underwrite most options have a vested interest in having the stock price go down by the time the market closes this Friday. There are options on about 4 million shares that expire worthless if the stock price is below 110, 3.4 million shares worth that expire worthless if the price is below 105, 5 million shares worth that are worthless if the stock is below 100, etc. The backers of those options would love nothing more than to see as many as possible expire worthless. They've been known to manipulate Apple's share price downward in the week leading into expiration. (Or at least Apple has managed to go down in the days before expiration in each of the last 6 months, even as the stock has been generally going up.)
If you want to know who stands to benefit from Apple going down, see who the big option underwriters are...
-JMP
Re:And when do options expire this month? :-) (Score:5, Informative)
You obviously don't understand how options traders operate. Those who write the options do not sell them "naked". Instead they purchase an appropriate amount of stock at the same time they sell the option, adjusting the amount according to the "Delta" as supplied by a variant of the Black-Scholes [wikipedia.org] model. See here [thepitmaster.com] for more information on how that works.
Because these options writers have sold the options short, and hedged the delta, they have sold volatility or are short gamma. Their best outcome is if the stock price does not move, because the risk-reward profile is positive for stable prices. They do not particularly care whether or not the options expire worthless. Big swings in the stock price like yesterday's, though, are quite painful for them.
Disclaimer: I am a finance industry professional specializing in options models.
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Testing the waters? (Score:4, Interesting)
Re:Testing the waters? (Score:5, Interesting)
Engadget gets it... internal leak... plugged?
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Why was the parent rated flamebait??? This is exactly the first thought that went through my mind. Although, on further consideration, it's possible that you couldn't tell whether it was one of the "targets" that forwarded it or someone else in the company who received a copy from one of the targets. Either way, I don't see a flame ware coming out of this.
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Lets not forget Engadget could look like blog but it is a very respected site for years. Every professional in industry watches that site as far as I can tell. There are some people saying "random blog", no it is not a random blog. It is the site which has exclusive insider information.
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Ah, the old Barium Lie technique :-)
As once used by Jennifer Lopez, iirc. The technique of the stars!
Re:Testing the waters? (Score:5, Insightful)
"This simply does not make any sense.
Apple only pushed Leopard back a few weeks ago, and confirmed the iPhone shipping even more recently when they released their quarterly earnings.
Is someone pulling your leg?"
These are the kind of things that Engadget should have thought about before the story was posted without contacting Apple.
And if they were running behind, as you hypothesize, why would they need to "test if they could push back the releases", either they're behind and they have to, or they're not behind and they don't have to. What do they do if they are running behind and do "scare the sheep"? That makes even less sense.
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They have conferences, sales meetings, and everything all ready to roll for the iPhone on the days and weeks after the official release date. They were dead serious that the iPhone was a go.
What I'm surprised about... (Score:5, Insightful)
Re:What I'm surprised about... (Score:5, Insightful)
Re:What I'm surprised about... (Score:5, Insightful)
The real story is that somebody managed to fool some number of Apple employees into believing the fake memo. It's hard to say much more without some more details (was the From: header spoofed, or was it just good enough to make it past a casual glance?). Why aren't official confidential memos signed by a closely guarded private key? That way employees would know unsigned memos are quite possibly fake.
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I'd argue that, quite often, an internal leak would be a better source than a fluffy and biased press release!
Re:What I'm surprised about... (Score:5, Insightful)
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Maybe that's what Apple is trying to do. The Apple rumors industry is a thorn in their side on principle; the best way to torpedo rumor sites is to infect them with spurious crap that looks official, catching internal leaks as they go.
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1) Send around a fake email, indicating something negative about a company.
2) Buy a bunch of shares when the share price has reduced.
3) Wait and monitor the market.
4) Sell shares when the share price has been restored.
4) Profit!!!
Even a reduction in 2p means a significant gain when you can be reasonably confident to buy many shares, as a company as large as Apple will quickly resolve their share pricing.
* Not even a ??? damnit, I'm failed as a
Downside to secrecy (Score:3, Insightful)
Re:Downside to secrecy (Score:5, Insightful)
Maybe it's time the Apple rumor industry shut down. It's any company's decision to keep any and all information about upcoming products secret.
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.
When you're known as the industry's R&D house, it's likely worth a lot of money to keep new projects and features secret for as long as possible. Asking a company to tell you everything they're working on (or schedules) is nuts because it lets your competitors know where to aim - would you want your employer to do that?
Apple hasn't given up secrecy (Score:5, Informative)
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.
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There was a 6 month period between initial announcement and the customers getting them. Not many Apple products get that sort of a lead time, its usually 'announce, make available for ordering immediately, ship within 2 months'.
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Asking a company to tell you everything they're working on (or schedules) is nuts because it lets your competitors know where to aim .
Or, they could use the Microsoft Method: fill the channels with bloody obvious, redundant and conflicting pronouncements of what the future holds but only deliver about 4% of it. That'll keep everyone off balance, eh? Nobody really knows what in the hell you're working on and everyone will freeze in their tracks.
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The AppleTV launched on time, I believe? The iPhone is still scheduled for the June release that was originally announced way back when the product was introduced. The only slippage was Leopard.
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Re:Downside to secrecy (Score:5, Insightful)
Perhaps, or maybe it's Apple's way of finding out who's been breaking their NDA. Perhaps by first looking at trading activity, then by looking at the wording of the email that was posted on Engadget. After all, if you found this out, you'd want to either short stock or something first, then leak it out... Remember, Apple still has to deal with leaks, and something as wild as this may make it obvious since it'll hit the big sites (one of which is likely to post it verbatim, thus identifying the culprit). And people who react to silly things like "A well-connected Apple employee said..." or "Our insider Apple employee" do deserve to get burned if they make financial decisions based on an unverifiable source. The source could very well be real, but it could also be made up. Speculation on new products is one thing, but actually doing stuff based on news whose validity is as good as the neighbourhood bum...
As for intentional leaks, that's hard to determine. But if you're going to do stuff like sell stock, you might want to wait for official confirmation. Because it's so easy to write "A VP of marketing at Apple has told me that the iPhone will support 3rd party applications, and there is going to be an SDK released June 1. Developer iPhones will be released then as well."
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Well, if you want to commit a crime, be investigated by the SEC, convicted, and sent to jail, then yes, you'd short or something first.
If you just want to get fired, you'd forward the email on to your outside contact without touching the stock.
Cheaper Ways To Ferret Out NDA-busters (Score:3, Insightful)
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.
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Comment removed (Score:5, Insightful)
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Lately though, Apple have started giving out tidbits, such as the iPhone well before release. And what happened? A lot of people immediately tried to copy the iPhone.
If Apple think they're skating to where the puck will be (as opposed to where it is now), then why would they want a welcoming commitee waiting for them?
I thin
What are the implications for the website? (Score:5, Insightful)
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?
Re:What are the implications for the website? (Score:5, Insightful)
If you start punishing reporters for getting a story wrong based on a faulty source when a reasonable person would have accepted the source as credible, you will basically kill investigative journalism (as if it wasn't close enough to dead in this country as it is).
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The email claimed that Apple had issued a press release about major delays in two very important products. It would have been common sense to contact Apple and check if such a press release actually existed. We'll see what the SEC thinks ab
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If you start punishing reporters for getting a story wrong based on a faulty source when a reasonable person would have accepted the source as credible, you will basically kill investigative journalism (as if it wasn't close enough to dead in this country as it is).
Wh
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If by punish you mean no one reads their stories anymore so they don't make money and have to stop writing garbage. But there can't be laws against repeating what someone told you. Well, as long as they didn't tell you the HD-DVD key.
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I wouldn't be opposed to a lawsuit by parties harmed by this kind of incompetent journalism, but I think the most effective way for the public at large to punish this behaviour is to stop using them as reliable sources of information.
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If a website prints false news they can be held for libel by Apple, but not by the shareholders individually.. it's all part of the risk.
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not with respect to the stock (Score:4, Informative)
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.
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Looks like they are flushing out folks (Score:5, Interesting)
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Email 1: iPhone delayed until September. Leopard delayed until October.
Email 2: October/October
Email 3: October/November
If you already had a list of suspected leaks you could narrow the field very quickly with different month combinations.
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Just given a few different months, you could quite easily start narrowing down a leak.
Email 1: iPhone delayed until September. Leopard delayed until October.
Email 2: October/October
Email 3: October/November
If you already had a list of suspected leaks you could narrow the field very quickly with different month combinations.
You'd need to make it much more subtle than that. "Hey, did you get the memo that we're delaying the iPhone until September?" "What? I thought it said October." "OMG you're right... ponies!"
Instead, change around words subtly:
1. John Smith, Director of Product Development, has announced that the iPhone release will be pushed back to October.
2. John Smith, Director of Product Development, announced that the iPhone release will be pushed back to October.
3. John Smith, Director of Product Development, has
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That is extremly unlikely. If some joker thinks it is clever to fake an email, some idiot with need for a bit more importance forwards it to a rumor site, and they publish it without any fact checking, causing four billion dollars loss in market caps, that is bad. If some manager at Apple had the great idea to do this on purpose, that would be so incredibl
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The Canary Trap (Score:3, Interesting)
Owned (Score:2, Funny)
In other news... (Score:5, Funny)
interesting... (Score:3, Interesting)
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well, you know what they say --- once is luck, twice is a coincidence, three times is a trend...
I wonder ... (Score:2)
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This doesn't smear [douginadress.com]
Lesson Learned? (Score:2)
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Wow, Microsoft must be desperate! (Score:2, Flamebait)
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.
tempering with coorporate strategies and plans (Score:2)
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.
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The Real Culprit Here is Engadget (Score:4, Insightful)
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.
Uber Hacker Day Traders (Score:2)
#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.
Uhhhmmm, not really (Score:3, Insightful)
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.
The first sign something was amiss... (Score:2, Funny)
rumours can backfire... (Score:2, Interesting)
Can't Be Real (Score:5, Informative)
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.
The great interest of this episode (Score:2)
Expect put option sales to rise gradually over the next week or so.
This is what you get when depending on... (Score:2)
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
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First off, you have to understand that the Western World has ALWAYS been suckers for the media. Hitler's regime didn't invent propaganda. They simply picked up the same textbooks that Chuchill and Roosevelt were reading on the subject. We have "freedom of the press" built into the constitution for a damn good reason. The guys who wrote it knew damnwell how to play the media like a cheap instrument. Go as far back as the Romans, and Government knew all about how to get the press to
Online "Journamelism" (Score:2)
Gosh, that Steve Jobs is such an ogre about the Journamelists who cover Apple. Control freak!
Or maybe we see why.
Reminds me of an old test (Score:2)
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,
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People having knee-jerk reactions to news before (or with
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Re:Small potatoes (Score:5, Informative)
They have admitted:
* Inventing on paper a fake Board of Directors Committee meeting that never took place (source [sfgate.com])
* Using this fake meeting to backdate options at a total benefit to Jobs of $20 million (contrary to Jobs' false spin) (same source)
{snip}
Those facts are agreed by all parties.
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The facts are agreed by all parties, the fight is over WHICH members of management/board were responsible. Apple is blaming a FORMERCFO who is no longer CURRENT management, hence the spokesman's weasel words, which you unthinkingly parrot. I don't need another source, you just need to THINK.
Unthinkingly parrot? It's from the article that you linked to and I even put in the qualifier "Sure the weight of that statement is diminished given that it's from an Apple spokesman". I have no interest in this deteriorating into a flamewar, but it seems to me that you unthinkingly cited that article. Clearly some previous board members and/or upper management are guilty. But that's not the argument... to recap:
Re:Small potatoes (Score:4, Informative)
So if you grant options based on a strike price in the past, but you admit this is what you are doing, and call them "in the money options based on Dec 1 1900 strike price" instead of "options granted Dec 1 1900", you are fine. Pretending you granted the options in the past is fraud, and it's what Apple has admitted doing.
There's more in the New Yorker article.
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